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THE BREAD BAKING INDUSTRY 



Federal Trade Commission 


to 

Hon. James F. Byrnes, Director, 
Office of Economic Stabilization 


December I, 1942 



NOT FOR PUBLICATION 









THE BREAD BAKING INDUSTRY 



--.Federal Trade Commission 


to 


Hon. James F. Byrnes, Director, 
Offi ce of Economic Stabilization 


December I, 19^2 



FEDERAL TRADE COMMISSION 

William A. Ayres, Chairman 
Garland S. Ferguson 
Charles H. March 
Ewin L. Davis 
Robert E. Freer 

Otis B. Johnson, Secretary 




L ULi • VU'&1'£ 


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TABLE 0 F CONTENTS 

Page 

Letter of December 1, 1942 to Hon. James F. Byrnes, Director of 
Economic Stabilization 

Section 1. Origin and objective of the inquiry . 1 

Section 2. Commission's inquiry for Office of Price 

Administration . 2 

Section 3. Cooperation of the industry . 4 

Section 4. Bakery industry costs . 5 

Costs per dollar of sales in 1940 . 5 

Cost to produce and sell bread and rolls-1942 . 7 

Losses on stales . 12 

Percentage of stale returns . 14 

Section 5. Possible savings of critical breadstuffs . 16 

Section 6. Economies in the slicing and wrapping of bread .... 21 

Section 7. Stale returns . 25 

Wastage of stales not used for human food. 30 

Conclusion . 32 

Section 8. Savings through standardization . 33 

Reduction in kinds of bread . 34 

Number of "varieties" of bread and rolls baked .. 35 

Savings by reducing "varieties" . 36 

Section 9. Sizes and weights of loaves of bread . 38 

State laws prescribing weights and sizes of loaf 

bread . 38 

Use of varying weights and sizes in an unfair 

and deceptive manner . 39 

Limiting sizes and weight used as a means of 

fixing prices . 41 

Variations in sizes of pans . 42 

Section 10. Percentages of labor turnover and other labor 

problems . 45 

Direct effects of high labor turnover . 49 

Indirect effects of high labor turnover . 49 

Increase of productive labor costs per 100 
pounds of bread and importance thereof . 53 

Section 11. Premiums . 55 






























TABLE OF CONTENTS (Continued) 


Page 

Section 12. Returns on investment and profits on sales - 

Bread Baking Industry . 56 

Introduction . 56 

Returns on investment . 56 

Profits on sales . 59 

Section 13. Officers' salaries . 61 


♦ 












FEDERAL TRADE COMMISSION 


WASHINGTON 


W. A. AYRES 

CHAM MAN 

December 1, 1942 


Honorable James F. Byrnes, Director, 
Office of Economic Stabilization, 
Executive Office of the President, 
Washington, D. C. 


In re: Bread Baking Industry 
Dear Director Byrnes: 

In your letter dated October 23, 1942, you requested the Commis¬ 
sion to undertake "a quick but adequate survey” of the bread and flour 
industries with a view to providing you with the facts to determine 
what economies can be made in those industries, for your use in decid¬ 
ing what measures would be feasible to reduce the wheat subsidy or re¬ 
duce the price of bread to the consumer. The Commission, on October 23, 
1942, directed that full and complete compliance be given to your re¬ 
quest and that the work be given first priority and be expedited in 
every way possible. A field inquiry was begun October 26 and report 
forms calling for needed information were sent to a representative 
sample of bread baking companies on the same date that budget approval 
was obtained, namely, October 31, 1942. 

The Commission obtained, for the year 1941, complete information 
on companies with aggregate sales of $476,181,356 or over 50 percent 
of a total value of production reported by the United States Bureau of 
the Census for 1939. The total investment of these companies aggre¬ 
gated $203,724,427 for the year 1941. These statistics are all for 
wholesale or combined wholesale or retail bread baking companies. For 
certain statistics a larger sample was obtained. 

The principal facts developed by the inquiry are as follows: 

(1) The cost of baking and wrapping bread and rolls for wholesale 
bakers increased from $4.51 in March, 1942 to $4.74 in September, 1942 
per 100 pounds of bread, and the total cost to produce and sell bread 
and rolls increased from $6.49 in March to $6.70 in September, 1942; 

(2) The increase of $0.23 per 100 pounds to bake and wrap bread 
and rolls from March to September, 1942 resulted from an increase of 
$0.16 in ingredient costs, $0.09 in labor, $0.01 in wrapping materials, 
offset by a decrease of $0.03 in indirect labor and shop overhead; 

(3) Selling, delivery, administrative and general expenses de¬ 
creased $0.02 per 100 pounds from March to September, 1942; 

(4) The net loss from the return of stale bread and rolls in¬ 
creased from $0.10 in March, 1942 to $0.12 in September, 1942 per 100 
pounds of bread and rolls baked; 



2 


Honorable James F. Byrnes December 1, 1942 

(5) The average profit per 100 pounds of bread and rolls was 
$0.35 In March, and $0.47 In September, 1942; 

(6) Based upon total Investment the average rate of profit for 
the companies covered ranged, for the period 1936-1941, from 10.37 
percent In 1937 to 12.92 In 1938; and for the period available in 1942 
the average was 15.59 percent; 

(7) In 1942 the average rate of return for small companies with 
sales (In 1941 less than $500,000) was 18.37 percent, for companies 
with sales ranging from $500,000 to $1,000,000 the average was 21.77 
percent, for companies with sales from $1,000,000 to $20,000,000, the 
average was 17.46 percent; and the largest four companies, each with 
sales In excess of $20,000,000, had the lowest average, namely, 12.81 
percent; 

(8) In contrast the showing for rates of return on investment, 
the average profit per dollar of sales was lower for the smallest size 
group of wholesale bakers than for the largest four companies, 2.84 
cents compared with 4.52 cents In 1941, and 4.68 cents compared with 
6.03 cents in 1942; 

(9) 211 companies in 1941 and 236 companies In 1942 reported 
profits, and 44 companies in 1941 and 19 companies in 1942 had losses; 

(10) 100 companies in 1941 and 145 in 1942 had profits ranging 
from 15 to over 95 percent on their total investment; 

(11) In 1942 the profit range for 210 wholesale baking companies 
reporting profits was from .42 of a cent to 22.75 cents per dollar of 
sales, and for 25 companies making house-to-house delivery the profit 
range was from .34 of a cent to 13.28 cents, while the losses for 22 
wholesale bakers ranged from .01 to 9.63 cents per dollar of net sales, 
and for 4 house-to-house companies the loss ranged from .99 cents to 
4.70 cents; 

(12) It is significant that the companies reporting losses from 
the sale of bread and rolls had higher net losses rrom stale returns 
than companies reporting profits; 

(13) 156 plants in March, 1942 and 132 plants in September, 1942, 
out of 535 reporting, had stale returns in excess of 5 percent of the 
total bread and rolls produced; the highest percentage in March was 
27.05 percent and in September, 17.92 percent; 

(14) There was a wide range in the proportions of different in¬ 
gredients used in the wide variety of bread formulas in use, based 
upon flour as 100 percent, the range was from 0 to 11 percent of milk, 
from i percent to 7 percent of shortening, and from \ percent to 12 
percent of sugar; 


3 


Honorable James F. Byrnes December 1, 1942 

(15) Milk, shortening and sugar are all critical products; if 
a bread formula somewhat leaner than the average of formulas now in 
use, were used by all bakers, there would result an annual reduction 
in the cost of bread and rolls produced of approximately $5,767,000 

in sugar, $8,501,000 in shortening, and $9,206,000 in milk, or a total 
of $23,474,000, based upon the estimated 1942 production; 

(16) Other savings would result from the elimination of premiums 
given by a small percentage of bak-lng companies; prohibition of slicing 
would produce small savings and would lay the basis for greater savings 
through the elimination of inner wrapping and the use of lighter outer 
wrapping; standardization of weights and sizes within the imposed lim¬ 
its of pans now in use offer further opportunities for savings in cost 
and manpower through the elimination of varieties requiring expensive 
hand operation involving twisting, shaping, panning, etc.; 

(17) Based upon estimates made by 104 bakers, a saving of $0.04 
per 100 pounds of bread and rolls could be obtained by reducing their 
output to one formula for each kind of bread (white, rye, whole wheat, 
raisin); this on the basis of current production would amount to not 
less than $4,000,000; 

(18) The greatest source of waste results from the practice of 
consignment selling, which when competitively used results in exces¬ 
sive waste which, on the basis of September, 1942 statistics, resulted 
in 250,000,000 pounds on an annual basis being destroyed or sold for 
other than human consumption; 

(19) This annual waste of bread would furnish 1/3 of a pound of 
bread per day for a population of 2,055,000, which is 156,000 greater 
than the entire State of South Carolina; 

(20) The cost to bake and wrap the 250,000,000 pounds of bread 
and rolls not sold for human consumption on the basis of September, 

1942 production costs aggregates $11,850,000; 

(21) High and increasing rates of labor turnover, which has 
lessened efficiency and greatly increased the amount of overtime and 
increased wage rates have Increased bakers' costs, particularly those 
having plants located in or near war industry centers; 

(22) The average increase in labor cost from March, 1942 to Sep¬ 
tember, 1942 was 9 cents per 100 pounds of bread and rolls baked, or 
$10,814,000 on an annual basis; 

(23) For 243 companies for which the Information is available 

19 officers, or 3 percent of officers for which salaries were reported, 
received total remuneration in excess of $25,000 during 1941; 

(24) The aggregate amount of salaries for the 19 officers re¬ 
ceiving in excess of $25,000 was $665,000 or an average of $35,000 
per officer; in addition six other officials received $25,000; 


4 


Honorable James F. Byrnes 


December 1, 1942 


(25) It appears that a considerable part of the savings made by 
the Industry In 1942 resulted from the reduction of delivery expense 
brought about by the Office of Defense Transportation. 

It appears that the limit of savings that can be obtained through 
voluntary effort of the industry has been reached. The Commission, 
therefore, is of the opinion that the prohibition of the above enumer¬ 
ated practices will accomplish savings of critical foodstuffs and other 
materials and enable the industry to pay a substantially higher price 
for flour, making it possible to at least reduce the wheat subsidy, or 
to reduce bread prices. 

It appears that in order to prevent evasion of a regulation for¬ 
bidding consignment selling, it would have to be drawn so as to pro¬ 
hibit the return or resale to the baking company of any bread or rolls, 
either directly or by subterfuge. This also is the opinion of many 
bakers. 

The Commission will be pleased to be of any further assistance to 

you. 

By direction of the Commission. 


Sincerely yours, 



W. A. Ayres, 
Chairman. 


FEDERAL TRADE COMMISSION 


REPORT OF DECEMBER 1, 1942 
ON 

THE BREAD BAKING INDUSTRY 
TO 

HON. JAMES F. BYRNES, DIRECTOR, 
OFFICE OF ECONOMIC STABILIZATION 


Section 1. Origin and Objective of the Inquiry 

This inquiry into the Bread Baking Industry was made by the 
Federal Trade Commission pursuant to a request, first over the tele¬ 
phone on October 21, 1942, and in a letter, dated October 23, 1942, 
from Honorable James F. Byrnes, Director of the Office of Economic 
Stabilization. Director Byrnes particularly requested that the Com¬ 
mission undertake "a quick but adequate survey for us of the bread 
and flour industry, with a view to providing us with the facts 
to determine what economies can be made in the industry so as to re¬ 
move the need of a recently approved subsidy for wheat, without re¬ 
ducing the return to farmers or to bring about a lowering of the 
price of bread to consumers." 

The inquiry with respect to bread was directed to develop the 
facts which might enable the Economic Director to determine whether 
the limitation or elimination of certain practices will reduce costs 
of bread production "so as to remove the need for a recently approved 
subsidy for wheat, without reducing the return to farmers, or bring 
about a lowering of the price of bread." 

The practices, the limitation or restriction of which it was be¬ 
lieved might lead to cost reductions, included double wrapping of 
bread, returns of so-called stales, consignment selling, the use of 
premiums, possible savings from standardizing the production of bread, 
reducing the number of loaf sizes and weights and the varieties of 
bread, concentrating on specific standard quality loaves, possible 
savings in delivery by reducing cross hauls, curtailing the number of 
deliveries or pooling deliveries. The facts are also being obtained 
to disclose "the possibility of lowering profit margins and the pay¬ 
ment of workers and officials," and to what extent "high salaries, 
particularly over $25,000 a year, or bonuses are paid in the industry." 
Consideration is also being given to "how these various economies will 
effect different size units in the industry." 

On October 23, 1942, "the Commission directed a full and complete 
compliance with the request made by Justice Byrnes, Director, Office 
of Economic Stabilization, in letter of October 23, 1942, in connection 
with this inquiry; that the work be given first priority and expedited 




2 


in every way possible; and that the Chief Economist proceed with his 
staff and such other members of the staff as may be assigned to make 
the required investigation and report, and to submit the report to 
the Commission at the earliest possible moment." 

Conferences were held with other government departments and 
agencies, first at the call of Mr. Sam Lubell, Assistant to the 
Director of Economic Stabilization, and later at the offices of the 
Federal Trade Commission, to ascertain what facts were already avail¬ 
able and what data were needed by other agencies, particularly the 
Office of Price Administration. Commission examiners began a canvass 
of the bread baking Industry on October 26, 1942, and report forms, 
which the baking industry was requested to return in 10 days, were 
mailed on October 31, 1942, the same day approval was obtained from 
the Diviaion of Statistical Standards of the Bureau of the Budget. 

Section 2. Commission’s Inquiry for Office of Price Administration 

During the latter part of 1941 this Commission made an inquiry 
into the bread baking industry and, in its directions, stressed "the 
present desirability of achieving every possible savings in cost in 
the bread baking Industry, to the end that the price of bread be kept 
to a minimum, in the interest, particularly, of the low-income con¬ 
sumer"; and it also directed that the "following marketing and dis¬ 
tributive practices of the bread industry and their relation to and 
effect upon bakers' costs and consumer prices for bread: 

(1) The sale of bread by bakers to retailers on consignment. 

(2) The practice of bakers of accepting the return of stale 
bread remaining unsold on retailers' shelves. 

(3) The practice of delivering fresh bread daily or oftener 
to retail outlets. 

(4) The sale of bread of the same kind in loaves of many 
different sizes and weights. 

(5) The said of bread of the same kind but of more than one 
grade or quality, taking into consideration particularly the 
marketing of so-called 'secondary' bread. 

(6) The use of premiums, combination offers, free goods, 
prizes and the furnishing of facilities by bakers to retailers, 
in connection with the sale of bread." 

It was further directed, "That said investigation shall be pursued 
with the object of ascertaining whether the costs of producing and 
marketing bread and the prices paid therefor by consumers could be 
reduced by a modification of or an elimination of any or all of the 
above practices." 




3 


This inquiry for the Hon. Leon Henderson, Administrator of the 
Office of Price Administration, covered the financial results for the 
period 1936 to the middle of 1941. 

Among the important facts developed by the Commission were the 
following: 

1. The average earnings, before income taxes, for the 60 com¬ 
panies examined by the Commission, with nearly 24 percent of the total 
sales of the bakery industry, ranged from approximately 9 to 13.5 
percent for their stockholders during the period 1936 to 'the latter 
part of 1941. The highest percent of earnings was for 1938 and the 
lowest in 1941. After the payment of income taxes, the range was 
from about 11 in 1938 to nearly 5.6 in 1941. There was a wide range 
for individual companies. Seven of the sixty companies had losses 

in 1938 and 14 had losses in each of the years 1940 and 1941. The 
rates of return for 1941 do not give full effect to price increases 
made during the latter part of the year. The average lower, though 
still substantial, earnings in 1941 resulted from substantial in¬ 
creases in materials and labor costs. 

2. The aggregate average net profit per dollar of sales, for 
the companies examined, ranged from a minimum of 4.11 cents in 1941, 
to 6.52 cents in 1938. In 1940, the last full year covered, the 
average net profit was 5.35 cents for each dollar of sales. Increas¬ 
ing costs of wages and salaries, selling and delivery expenses and 
taxes, more than offset decreases in the proportion of materials 
costs after 1937. 

3. It is estimated that if all waste of stale bread not now 
used for human consumption could be eliminated there could be saved 
by the baking Industry alone annually sufficient bread to feed a 
population of approximately 2,055,000 individuals. Vast additional 
quantities of bread could also be saved in hotels and other eating 
places and in the homes of this country through cooperative efforts 
of our citizens. 

4. Important contributions to the national effort to conserve 
motor vehicles and motor vehicle tires could be made by the bakery 
industry and marked reductions made in their selling and delivery ex¬ 
penses, which in 1940 constituted 28.8 percent of their total cost of 
sales, if deliveries to all types of trade could be limited to not to 
exceed one per day, and wherever possible, unprofitable bread routes 
be discontinued. 

5. Other uneconomic practices such as the giving of premiums, 
combination offers, free goods, the furnishing of display racks 
gratis, entering into cooperative advertising arrangements with retail 
dealers, which have become an abuse in some localities, should be 
promptly and permanently discontinued. 

The Commission found that a number of costly and uneconomic 
practices existed in the industry, the limitation or elimination of 


4 


which would result in material savings of flour, sugar, shortening, 
etc., and would make further general price increases unnecessary 
unless there were further marked increases in material and labor costs; 
and that these savings could be accomplished without reducing the 
quality or nutritive value of bread and without depriving consumers 
of essential bread products. 

The Commission believed that the maximum savings in food values 
and labor could be attained only by the prohibition of what amounts 
to selling bread to the retail distributor on a consignment basis. 
Attention was called to the contention, particularly on the part of 
some wholesale bakers, that their business would be jeopardized by 
the elimination of consignment sales. It appeared, however, that any 
attempted limitation of the return of stales to a small percentage of 
the quantity placed on the retailers’ racks would be impracticable be¬ 
cause of the extensive policing that would probably be required to 
insure compliance. 

It was recommended that the repetitious delivery of bread over 
the same route be limited to the least number possible. Special 
deliveries to public eating places should be limited to emergency 
orders in excess of the usual daily requirements. These limitations 
would conserve motor vehicles and tires, petroleum products and labor. 
Attention should also be given to combining or eliminating unprofit¬ 
able delivery routes as a further conservation measure. 

Abuses in respect to furnishing free bread racks and other store 
facilities, giving free goods, coupons, prizes, combination deals, 
etc,, or joining in unwholesome arrangements for cooperative adver¬ 
tising with retailers, should be eliminated to reduce bakery costs. 

To further reduce costs, and conserve paper, the use of only a single 
wrapper should be permitted. 

For the protection of the consumer and to attain further savings 
in cost, permissible loaf weights should be limited. The weights 
suggested for household bread were 16 oz., 20 oz., and 24 oz., with 
the weight clearly shown on the wrapper. Baked weight tolerances 
should be definitely specified on the wrapper. 

The sale of more than one brand of bread by a given baker made 
under the same formula should be prohibited. 

In the interest of the consumer, and with a view of preventing 
the sale of stale bread as fresh bread, it was suggested that con¬ 
sideration be given to the dating of bread. 

Section 3_. Cooperation of the Industry 

The Commission obtained splendid cooperation from the industry. 
Report forms were sent to companies requesting reports covering 820 
bakery plants, and at the close of business Thanksgiving Day, 535 
reports had been received, or nearly 70 percent of those to whom 

FTC 1X1909 




5 


report forms were sent. Five reports were returned unclaimed, 18 
were out of business, and 8 were excused because they were unable to 
furnish much of the information needed. Reports are still being 
returned. 

A number of bakers voluntarily furnished information, and some 
asked that report forms be sent to their companies. 

Out of 820 report forms sent to the baking industry, 584 com¬ 
pleted reports were returned by November 30, 1942 (535 in time to be 
Included in this report). Eighteen were returned because the con¬ 
cerns were out of business, 12 were excused, and five were returned 
unclaimed. The Commission's examiners interviewed about 300 bakers 
covering every phase of the inquiry. 

Section 4. Bakery Industry Costs 

Costs per dollar of sales in 1940 . - In 1940 the cost per 
dollar of sales for 82 representative baking companies making a wide 
variety of bakery products consumed 94.70 cents of each sales dollar. 
The largest item of cost was that for material which averaged 38.84 
cents, followed by 24.24 cents for selling expense and 12.96 cents 
for production labor and other payroll in costs. The following 
statement gives the detail for the average items of costs and ex¬ 
penses for 82 representative bakery companies: 


Items of Income and Expense 

1940 

Ratios or cents 
per dollar of 
sales 

COST OF GOODS SOLD 



Materials cost - direct. 

$128,124,281 

28.84 

Production labor cost ) 

47,761,215 

12.96 

Other payroll In costs 1/) 



Depreciation, obsolescence, etc. - plant facilities. 

6,991,602 

2.12 

Corporate taxes charged to cost of goods. 

2,005,604 

0.91 

Social Security and pension fund payments charred to cost of goods. 

1,802,088 

0.55 

Repairs and maintenance. 

5,102,232 

1.55 

Other plant costs and oDeratlng expenses not specified. 

13,804,179 

4.19 

Research and development expenses Included in cost of goods. 

9,196 

0.00§/ 

Cost of finished goods resold. 

8,271,867 

2.51 

Total cost of goods sold. 

209,874,265 

62.62 

Gross margin on sales. 

119,966,728 

26.37 

Other operating revenue or loss. 

291,070 

0.12 

Total gross margin. 

120,257,798 

26.49 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 



Selling expenses. 

79,927,848 

24.24 

Advertising. 

8,689,850 

2.63 

Administrative and general office. 

11,098,261 

3.36 

Corporate taxes charged to selling and administrative expenses. 

807,711 

0.24 

Social Security and pension fund payments charged to selling and 



administrative expenses. 

2,135,120 

0.65 

Research and development expenses Included In selling and administrative 



expenses. 

24,072 

0.01 

Total selling, general and administrative expenses. 

102,692,862 

31.13 

Net profit before provisions for uncollectible accounts. 

17,664,936 

5.36 

Deduct provision for uncollectible accounts. 

179,267 

0.06 

Net profit from manufacturing and trading. 

17,485,669 

5.30 


1/ Except labor Included In repairs and maintenance and research and development expenses. 
2/ Less than 0.005 percent. 











































6 


In addition to the labor and payroll cost in bakery plants, there 
is labor cost in a number of other items, which aggregates 31.58 cents 
per dollar of sales, as shown in the following statement: 


Wage Classifications 

Amount 

Per Dollar 
of Sales 

Production labor cost - direct) 

$ 42,695,794 

2,464,460 

54,239,133 

1,050,544 

1/ 3,698,146 

12.94 

0.75 

16.45 

0.32 

1.12 

Other payroll in cost of goods)’ 

Payroll in repairs and maintenance. 

Payroll and commissions in selling expense.. 

Payroll in advertising expense. 

Payroll in administrative and general 

office expenses. 

Total. 

$104,148,077 

31.58 


1/ Includes officers' salaries for one company not segregable. 


Cost to produce and sell bread and rolls—1942 . - In the present 
inquiry information concerning the costs of production and sale of 
bread and rolls was tabulated for 374 individual bread baking plants, 
of which 347 were engaged in the wholesale business and 27 in the 
retail house-to-house business. Such information for these plants is 
presented for an accounting period Including March 31, 1942 and for an 
accounting period including September 30, 1942. The accounting period 
generally covers operations for a four or five week period, but some 
companies reported for a longer period. 

The 347 plants whose products were distributed at wholesale baked 
339,864,239 pounds of bread and rolls during the March cost period and 
376,357,154 pounds of bread and rolls during the September period. The 
costs, expenses and profits per 100 pounds of bread and rolls produced 
by these plants during each period are compared below: 



March 

1942 

period 

September 

1942 

period 

Increase 

or 

Decrease* 


per 

100 lbs. 

per 

100 lbs. 

per 

100 lbs. 

Net Sales. 

$6.84 

$7.17 

$0.33 

Cost to produce and wrap: 




Materials (flour and other Ingredients). 

2.75 

2.91 

0.16 

Direct labor. 

0.71 

0.80 

0.09 

Indirect labor and shop overhead. 

0.62 

0.59 

*0.03 

Wrapping material. 

0.43 

0.44 

0.01 

Total cost to produce and wrap. 

4.51 

4.74 

0.23 

Gross profit from sales. 

2.33 

2.43 

0.10 

Selling and delivery expense: 




Routemen's and supervisors' compensation. 

0.83 

0.85 

0.02 

Delivery vehicle expense. 

0.33 

0.28 

*0.05 

Other selling expenses. 

0.47 

0.49 

0.02 

Total selling and delivery expenses. 

1.63 

1.62 

*0.01 

Administrative and general expenses. 

0.35 

0.34 

*0.01 

Total selling, delivery and administrative and 




general expenses. 

1.98 

1.96 

*0.02 

Total cost to produce and sell. 

6.49 

6.70 

0.21 

Net profit. 

0.35 

0.47 

0.12 











































7 


As shown above, the total cost to produce and sell bread and 
rolls by the 547 plants Increased $0.21 per 100 pounds. The principal 
items of increase in the costs and expenses were for flour and other 
Ingredients and direct labor, which increased $0.16 and $0.09 per 100 
pounds, respectively. It will be noted that delivery vehicle expense 
and indirect labor and shop overhead in the production departments de¬ 
creased between the two periods. Delivery expense decreased $0.05 per 
100 pounds. The increased volume of production in bread and rolls 
probably accounts for the $0.03 per 100 pounds decrease in indirect 
labor and shop overhead between the two periods. 

The following tabulation expresses the results of operations of 
the 347 plants for the March and September periods in relation to 
dollar sales: 



March 

1942 

period 

September 

1942 

period 

Total net sales. 

$23,258,122 

$26,982,056 

Cents Der dollar of net sales: 



Net sales. 

100.00 

100.00 

Cost to produce and wrap: 



Materials. 

40.22 

40.59 

Direct labor. 

10.36 

11.14 

Indirect labor and shop overhead. 

9.07 

8.26 

Wrapping material. 

6.24 

6.09 

Total cost to produce and wrap. 

65.89 

66.08 

Gross profit from sales. 

34.11 

33.92 

Selling and delivery expense: 



Routemen's and supervisors' compensation. 

12.21 

11.78 

Delivery vehicle expense. 

4.77 

3.87 

Other selling expenses. 

6.89 

6.89 

Total selling and delivery expenses. 

23.87 

22.54 

Administrative and general expenses. 

5.05 

4.76 

Total selling, delivery and administrative and 



general expenses. 

28.92 

27.30 

Total cost to produce and sell. 

94.81 

93.38 

Net profit on sales. 

5.19 

6.62 


Further details of the operations of the 347 plants that do a 
wholesale business are presented in the following table for the March 
and September, 1942 cost periods. This table summarizes the costs, 
expenses and profits per 1Q0 pounds of bread and rolls produced by the 
plants according to their location in the following six geographical 
areas: 


1. Maine, New Hampshire, Vermont, Connecticut, Massachusetts, 
Rhode Island, New York, New Jersey, Pennsylvania, Maryland, District 
of Columbia, Delaware, Virginia and West Virginia. 

2. North Carolina, South Carolina, Georgia, Florida, Tennessee, 
Mississippi, Alabama. 

3. Ohio, Indiana, Illinois, Wisconsin, Michigan, Kentucky. 

4. Louisiana, Texas, Arkansas, Kansas, Missouri, Iowa, Nebraska, 
South Dakota, North Dakota, Montana, Minnesota, Colorado, Oklahoma. 

5. Washington, Oregon, Utah, Wyoming, Idaho. 

6. California, Arizona, New Mexico, Nevada. 
































COSTS, EXPENSES AND PROFITS PER 100 POUNDS OF BREAD AND ROLLS PRODUCED BY 
347 PLANTS THAT DISTRIBUTE PRODUCTS AT WHOLESALE, ARRANGED BY GEOGRAPHICAL 
LOCATIONS, FOR THE COST PERIODS INCLUDING MARCH 31 AND SEPTEMBER 30, 1942 


8 


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9 


During each of the accounting periods including March 31, 1942 
and September 30, 1942, the 27 plants that distribute their products 
at retail from house to house baked 27,862,513 and 29,096,771 pounds 
of bread and rolls, respectively. The sales realization, costs and 
profits from the operations of these plants are compared for each cost 
period in the following tabulation: 



March 

1942 

period 

Sept. 

1942 

period 

Increase 

or 

Decrease* 


per 

100 lbs. 

per 

100 lbs. 

per 

100 lbs. 

Net Sales. 

$8.91 

$8.93 

$0.02 

Cost to produce and wrap: 

Materials (flour and other 




ingredients). 

2.95 

3.40 

0.45 

Direct labor. 

0.73 

0.78 

0.05 

Indirect labor and shop overhead.... 

0.72 

0.71 

*0.01 

Wrapping material. 

0.37 

0.39 

0.02 

Total cost to produce and wrap.... 

4.77 

5.28 

0.51 

Gross profit from sales. 

4.14 

3.65 

*0.49 

Selling and delivery expense: 

Routemen's and supervisors' compen- 




sation. 

1.96 

1.81 

*0.15 

Delivery vehicle expense. 

0.73 

0.57 

*0.16 

Other selling expenses. 

0.53 

0.42 

*0.11 

Total selling and delivery 




expenses. 

3.22 

2.80 

*0.42 

Administrative and general expenses.... 

0.43 

0.39 

*0.04 

Total selling, delivery and 
administrative and general 




expenses. 

3.65 

3.19 

*0.46 

Total cost to produce and sell.... 

8.42 

8.47 

.05 

Net profit. 

0.49 

0.46 

*0.03 


As shown above, there was a net increase of $0.05 per 100 pounds 
in the cost of producing and selling bread and rolls by the 27 plants 
that distribute their products at retail from house-to-house, and is 
accounted for by an Increase in cost of production and wrapping mate¬ 
rials of $0.51 per 100 pounds between the two periods, less a decrease 
of $0.46 per 100 pounds in selling, delivery and general and adminis¬ 
trative expenses. The largest cost increase was in flour and otner in¬ 
gredients which accounted for an increase of $0.45 per 100 pounds for 
materials. The principal decreases in other costs were in selling and 
delivery which decreased $0.42 per 100 pounds between the two periods. 



























10 


accounted for by decreases of $0.15, $0.16 and $0.11 per 100 pounds, 
respectively, in routemen's and supervisors' compensation, delivery 
vehicle expenses, and other selling expenses incurred in connection 
with the distribution of bread and rolls. 


The operating results of the 27 plants for each cost period are 
expressed in relation to dollar sales in the following tabulation: 



March 

1942 

period 

September 

1942 

period 

Total net sales. 

$2,482,319 

$2,597,699 

Cents per dollar of net sales: 



Net sales. 

100.00 

100.00 

Cost to produce and wrap: 



Materials. 

33.14 

38.09 

Direct labor. 

8.21 

8.69 

Indirect labor and shop overhead. 

8.03 

7.98 

Wrapping material...,. 

4.12 

4.35 

Total cost to produce and wrap. 

53.50 

59.11 

Gross profit from sales. 

46.50 

40.89 

Selling and delivery expense: 

Routemen's and supervisors' compen¬ 
sation. 

22.00 

20.24 

Delivery vehicle expense. 

8.17 

6.34 

Other selling expenses. 

5.95 

4.75 

Total selling and delivery expenses.. 

36.12 

31.33 

Administrative and general expenses. 

4.90 

4.37 

Total selling, delivery and adminis¬ 
trative and general expenses. 

41,02 

35.70 

Total cost to produce and sell. 

94.52 

94.81 

Net profit on sales. 

5.48 

5.19 


Losses on Stales . - The operating results that have been pre¬ 
sented in the preceding paragraphs for the 347 plants that distribute 
their products at wholesale and for the 27 plants that distribute their 
products at retail from house-to-house reflect losses incurred from 
returns of stale bread and rolls. 

The losses on stale returns for the 347 wholesale plants were 
equivalent to $0.10 per 100 pounds of bread and rolls produced during 
the accounting period including March 31, 1942, and $0.12 per 100 
pounds produced during the accounting period including September 30, 
1942, an increase of $0.02 per 100 pounds. 































11 


The following tabulation gives for the 347 wholesale plants the 
poundage of stale returns in relation to the total pounds of bread 
and rolls produced and the net loss from stales per 100 pounds of pro¬ 
duction for the March and September periods: 


Losses on Stales - 347 Wholesale Plants 




Period 
including 
Mar. 31, 1942 

Period 
including 
Sept. 30, 1942 

1 . 

Poundage of bread and rolls 
produced. 

339,864,239 

376,356,614 

2. 

Poundage of stale returns. 

19,511,855 

18,288,596 

3. 

Percentage of stale returns. 

5.72% 

4.86% 

4. 

Poundage of stales sold for 
human consumption. 

12,590,156 

9,584,195 

5. 

Poundage of stales otherwise 
sold or disposed of. 

6,921,699 

8,704,401 

6. 

Percentage of stale returns not 
sold for human consumption.... 

2.04% 

2.31% 

7. 

Cost to produce and wrap, per 

100 lbs. of production. 

$4.51 

$4.74 

8. 

Realization from sale of 

stales, per 100 lbs. 

$4.41 

$4.62 

9. 

Net loss from stales, per 100 
lbs. of production. 

$0.10 

$0.12 


In connection with the above table, it is significant that the 
companies reporting losses from the sale of bread and rolls sustained 
higher net losses from stale returns than the companies reporting 
profits. During the March cost period, 51 of the 347 plants sustained 
losses from operations of $0.27 per 100 pounds of bread and rolls pro¬ 
duced, while their losses from stale returns amounted to $0.20 per 100 
pounds. During the September period, 44 of the 347 plants sustained 
losses from operations of $0.24 per 100 pounds of bread and rolls pro¬ 
duced, while their losses from stale returns amounted to $0.18 per 100 
pounds. From this it can be seen that the losses from stale returns 
contributed materially to the overall losses from operations during 
each period. 

The losses on stale returns for the 27 house-to-house plants were 
much lower during each accounting period than for the 347 wholesale 
plants. During the March period the average loss on stales for the 
house-to-house plants was $0,003 per 100 pounds of bread and rolls 
produced; during the September period the loss was $0.04 per 100 pounds. 

The following tabulation gives for the 27 house-to-house plants 
the poundage of stale returns in relation to the total pounds of bread 
and rolls produced, and the net loss from stales per 100 pounds of 
production for the March and September periods: 

FTC LL1909 
















12 


Losses on Stales - 27 House-to-House Plants 




Period 
including 
Mar. 31, 1942 

Period 
including 
Sept. 30, 1942 

1 . 

Poundage of bread and rolls 
produced. 

27,862,513 

29,096,771 

2. 

Poundage of stale returns. 

1,490,081 

1,507,360 

3. 

Percentage of stale returns.... 

5.44% 

5.25% 

4. 

Poundage of stales sold for 
human consumption. 

1,347,040 

1,314,549 

5. 

Poundage of stales otherwise 
sold or disposed of. 

143,041 

192,811 

6. 

Percentage of stale returns not 
sold for human consumption... 

0.51% 

0.66% 

7. 

Cost to produce and wrap, per 

100 pounds of production. 

$4,770 

$5.28 

8. 

Realization from sale of 

stales, per 100 pounds. 

4.767 

5.24 

9. 

Net loss from stales, per 100 
pounds of production. 

0.003 

0.04 


Percentage of stale returns. - As shown in the two preceding 
tables, the percentage of stale returns decreased during the account¬ 
ing period including September 30, 1942, as compared with the period 
including March 31, 1942. For the 347 wholesale plants, the proportion 
of production returned as stale bread and rolls was 5.72% in the March 
period and 4.86% in the September period. These percentages reflect 
a marked decrease from the proportion of production returned as stales 
during 1941. In that year the stale returns averaged 7.20%. 

In 1941, the percentage of stales sold for human consumption was 
3.93%, and the percentage of stales used for animal food or destroyed 
was 3.27%. During the accounting period including September 30, 1942, 
the percentage of stales sold for human consumption was 2.55%, while 
the percentage of stales used for animal food or destroyed was 2.31%. 

While in general the reduction in the proportion of total pro¬ 
duction returned as stales has decreased considerably since last year, 
the stale returns are still high in many sections of the country. For 
individual plants, the proportion of stale returns varies widely— 
from reports of no returns to a maximum of 27.05%. The following tab¬ 
ulation shows the variation in the percentages of stale returns for 
177 plants, and their locations by States, having a minimum of stale 
returns of 5% in either the March or September accounting period: 

FTC LL1909 
















13 


Nebraska 

Nebraska 

Georgia 

Kentucky 

Kansas 

Maryland 

Wisconsin 

Maryland 

Illinois 

Kansas 

Illinois 

North Carolina 

Georgia 

North Carolina 
Missouri 
Illinois 
New York 
Ohio 

Wisconsin 

Colorado 

New York 

New York 

Illinois 

West Virginia 

Virginia 

New Hampshire 

Maryland 

Illinois 

Washington 

Iowa 

Missouri 

Florida 

Alabama 

Missouri 

Iowa 

Texas 

Ohio 

Arkansas 

Texas 

Oklahoma 

New Jersey 

Nebraska 

Rhode Island 

Texas 

Connecticut 

Iowa 

North Carolina 
Massachusetts 
Louisiana 
New York 
Illinois 
New York 
North Carolina 


March 

Sept. 

27.05% 

17.92% 

21.07 

16.07 

15.00 

15.00 

15.00 

14.99 

20.81 

13.29 

17.03 

12.37 

15.21 

12.37 

16.70 

12.30 

10.02 

12.02 

11.96 

10.31 

7.53 

10.15 

11.36 

9.97 

8.03 

9.73 

9.26 

9.63 

13.11 

9.56 

10.77 

9.48 

9.32 

9.41 

8.39 

9.34 

15.86 

9.21 

9.00 

9.00 

10.02 

8.94 

9.93 

8.94 

11.87 

8.90 

5.94 

8.82 

8.85 

8.65 

11.17 

8.58 

10.15 

8.55 

9.10 

8.47 

8.87 

8.47 

11.04 

8.36 

8.98 

8.35 

6.46 

8.33 

9.98 

8.30 

7.36 

8.26 

8.39 

8.17 

11.26 

8.16 

8.38 

8.07 

7.50 

8.03 

11.82 

7.88 

6.12 

7.85 

8.20 

7.80 

8.57 

7.72 

9.37 

7.71 

6.74 

7.64 

9.17 

7.63 

9.80 

7.60 

6.65 

7.43 

7.92 

7.40 

8.14 

7.36 

10.22 

7.12 

6.13 

7.01 

6.07 

6.97 

8.12 

6.95 


Texas 

Rhode Island 

Massachusetts 

California 

Maryland 

Indiana 

Pennsylvania 

Massachusetts 

Iowa 

Texas 

New York 

Pennsylvania 

Louisiana 

Illinois 

Washington 

Alabama 

Illinois 

Massachusetts 

Kansas 

Texas 

Minnesota 

Michigan 

Kansas 

Michigan 

Utah 

Washington 

Iowa 

Iowa 

Louisiana 

Pennsylvania 

Kansas 

New York 

Wisconsin 

Virginia 

Pennsylvania 

California 

New Jersey 

Indiana 

Ohio 

Iowa 

Maryland 

Ohio 

New York 

Missouri 

Massachusetts 

Virginia 

Nebraska 

North Carolina 

Massachusetts 

Georgia 

Missouri 

West Virginia 

New Jersey 


March 

Sept. 

9.16% 

6.91% 

5.41 

6.89 

8.93 

6.89 

7.79 

6.86 

6.89 

6.83 

5.68 

6.81 

5.11 

6.80 

8.83 

6.77 

7.37 

6.74 

9.50 

6.64 

7.64 

6.58 

6.73 

6.46 

10.25 

6.40 

5.51 

6.. 38 

7.63 

6.30 

6.89 

6.26 

4.65 

6.26 

8.57 

6.25 

7.56 

6.22 

9.18 

6.15 

6.30 

6.14 

10.85 

6.09 

6.25 

6.09 

7.15 

6.05 

11.10 

6.04 

5.75 

6.02 

7.13 

6.01 

5.59 

5.99 

5.26 

5.97 

3.70 

5.95 

3.25 

5.95 

4.76 

5.86 

7.19 

5.85 

4.22 

5.82 

7.48 

5.80 

8.03 

5.78 

4.57 

5.74 

5.47 

5.73 

8.67 

5.70 

5.22 

5.70 

5.81 

5.65 

5.16 

5.65 

6.25 

5.64 

5.07 

5.64 

5.60 

5.61 

6.99 

5.61 

5.71 

5.58 

5.03 

5.55 

4.19 

5.54 

5.36 

5.51 

4.23 

5.49 

4.51 

5.48 

8.09 

5.45 












14 



March 

Sept. 


March 

Sept. 

Maryland 

3.79% 

5.42% 

New York 

5.25% 

4.55% 

Georgia 

5.02 

5.39 

Illinois 

7.60 

4.53 

California 

4.16 

5.39 

New Mexico 

6.18 

4.49 

Missouri 

4.61 

5.36 

Michigan 

6.82 

4.44 

California 

5.99 

5.34 

D. C. 

6.87 

4.41 

Florida 

5.42 

5.34 

Vermont 

5.44 

4.39 

New Jersey 

7.23 

5.31 

Texas 

5.68 

4.34 

New York 

10.03 

5.30 

Ohio 

5.49 

4.33 

Illinois 

5.21 

5.30 

California 

7.04 

4.31 

Missouri 

6.28 

5.27 

Michigan 

5.11 

4.28 

New Hampshire 

7.13 

5.26 

Mississippi 

6.41 

4.27 

California 

5.67 

5.25 

Ohio 

6.59 

4.26 

New Hampshire 

3.70 

5.17 

Michigan 

6.50 

4.26 

New York 

4.49 

5.16 

New York 

7.52 

4.21 

Maryland 

6.70 

5.12 

Michigan 

5.94 

4.18 

Pennsylvania 

4.99 

5.11 

New York 

6.46 

4.17 

Minnesota 

3.75 

5.11 

Maine 

5.76 

4.16 

Pennsylvania 

4.89 

5.07 

Michigan 

6.30 

4.15 

California 

4.15 

5.07 

Idaho 

5.27 

4.12 

California 

7.33 

5.06 

Maryland 

5.49 

4.09 

Pennsylvania 

4.57 

5.06 

D. C. 

5.17 

4.08 

Indiana 

6.20 

5.05 

Kentucky 

5.11 

4.05 

Iowa 

4.25 

5.04 

Michigan 

6.44 

3.98 

Missouri 

2.74 

5.02 

New York 

6.88 

3.97 

Louisiana 

6.55 

5.01 

Pennsylvania 

5.12 

3.92 

Ohio 

3.77 

5.01 

Minnesota 

5.50 

3.91 

New York 

5.15 

4.99 

Colorado 

5.03 

3.89 

Mississippi 

7.33 

4.85 

New York 

5.82 

3.86 

New York 

5.53 

4.-83 

Ohio 

5.51 

3.78 

Colorado 

5.50 

4.83 

Pennsylvania 

7.31 

3.75 

Georgia 

5.63 

4.81 

California 

8.96 

3.72 

Texas 

5.46 

4.79 

Mississippi 

6.17 

3.44 

Ohio 

5.54 

4.78 

South Dakota 

6.07 

3.18 

Oklahoma 

5.43 

4.74 

Kansas 

5.93 

2.84 

Texas 

Michigan 

5.70 

8.19 

4.73 

4.63 

South Dakota 

5.72 

1.53 


Section 5. Possible Savings of Critical Breadstuffs 


Bakers were asked to state the percentages (based on flour con¬ 
tent) represented by milk, shortening and sugar used in their leading 
white loaf bread. The striking feature of the information furnished 
by more than 500 bakeries was the wide variation in percentages used 
in their leading product. For milk powder the percentages ranged from 
none to a high of 11.00 percent, with most formulas within the range 
of 3 to 5 percent. For shortening, the percentages ranged from half 
of 1 percent to 8 percent, the majority falling in the range of 3 to 
4 percent. Many bakers used no more than 2 percent and a considerable 
number used 5 percent. For sugar, the percentages reported ranged from 
less than one percent to a maximum of 12 percent, the largest number 
falling within the range of 5 to 7 percent. 
















15 


These showings coincide closely with the quantities shown in an 
"average quality" formula used by Associated Retail Bakers of America 
in their Bulletin #86 of August 18, 1941, which gave an average of 
3.71 percent for milk powder, 2.97 percent for shortening, and 5.94 
percent for sugar. 

The typical lean, average and rich formulas based on percentages 
of shortening used are shown in the table below. In basing selections 
on shortening alone it is recognized that shortening is only one 
element in the richness of bread as is noted below. 

Table JL • Typical percentages of Milk, Shortening and Sugar used by 


Bakers in Leading Loaves. 

(Relative "richness" of formulas based on percentage of shortening used.) 


Milk 

Shortening 

Sugar 

% 

% 

Lean Formulas 

% 

.0 

0.50 

0.50 

.0 

1.00 

2.01 

1.00 

1.00 

8.00 

4.00 

1.25 

7.00 

4.50 

1.50 

6.00 

2.40 

1.50 

4.60 

3.00 

2.00 

6.00 

11.00 

2.25 

Average Formulas 

4.75 

4.00 

2.50 

4.50 

6.00 

2.50 

8.50 

3.66 

2.75 

5.50 

4.00 

3.00 

6.00 

.60 

3.00 

7.25 

10.00 

3.25 

6.00 

3.35 

3.75 

7.88 

2.80 

3.80 

6.85 

5.00 

4.00 

7.00 

6.00 

4.00 

6.00 

2.00 

4.00 

Rich Formulas 

10.00 

3.00 

4.50 

6.30 

5.00 

4.50 

7.25 

2.50 

4.50 

4.45 

6.00 

5.00 

6.00 

0 

5.00 

5.00 

6.00 

5.00 

8.00 

4.00 

5.25 

5.00 

6.00 

6.00 

6.00 

4.00 

6.00 

8.00 

0 

6.00 

12.00 

3.50 

6.00 

6.50 

6.00 

7.00 

3.00 

7.50 

8.00 

10.00 













16 


Shortening used ranges from half of 1 percent to 8 percent. In 
the tabulation, percentages of shortening up to 2.25 percent have been 
more or less arbitrarily classed as lean formulas, percentages from 

2.5 to 4.0 percent as average formulas, and percentages of 4.5 and over 
as rich formulas. This method of selecting formulas has the effect of 
classing some formulas that are relatively high in overall richness 
based on all three ingredients combined as lean formulas as in the 
case of the last formula in the lean formula group. The same is true 
of some formulas in the other two groups. 

The table brings out rather concretely the wide variation in 
practice among bakers in the use of each of the three critical mate¬ 
rials in making their leading loaves. In giving their product dis¬ 
tinctive characteristics, bakers use the different ingredients in 
widely differing percentages. Some use relatively small proportions 
of one ingredient and relatively large proportions of one or both 
of the other two, while others use relatively large proportions of all 
three. This difference in practice is evident in all three of the 
formula groups shown in the Table. In all groups there is evidence 
that a low proportion of one ingredient is compensated by high per¬ 
centages of one or both of the other two. In general, also it will 
be noted that rich formulas carry high proportions of all three 
critical ingredients. 

If breads of satisfactory nutritive value can be made, for 
instance, with percentages not exceeding 2.5 percent of shortening, 

4.5 percent of sugar and 3 percent milk, it would seem that marked 
savings in critical materials might be accomplished by decreasing 
sharply the proportions used in making richer breads, the formulas 
for which call for milk up to 10 or more percent, shortening up to 8 
or more percent, and sugar up to 12 or more percent. Consumers would 
suffer some loss of ability to satisfy their taste for breads of dis¬ 
tinctive flavor or texture, but this would be an inconvenience rather 
than a hardship. Bakers who were obliged to change the characteristics 
of their leading loaves might suffer some loss of business. For this 
reason whatever is judged necessary as a war measure should be done by 
general order, equitably enforced, to insure its observance by all 
bakers affected. 

According to the data furnished by the 500 bakers, it is evident 
that the majority find it possible to make satisfactory white pan 
bread with percentages of these three critical materials approximating 
the Associated Retail Bakers’ average quality formula. Many bakers 
find formulas leaner than the Associated Retail Bakers' average satis¬ 
factory for their leading loaf bread. Savings can unquestionably be 
made on many formulas widely used. With sugar already rationed, a 
shortage of milk and other dairy products already developed and a 
scarcity of shortening in the offing, the use of more than the pro¬ 
portions in the average formula is a waste of critical materials. 

With respect to shortening, a successful Independent baker, in a 
letter dated November 22, 1942, stated: 


17 


"I wish to emphasize it is my belief that 1 percent lard in 
the formula of bread would be sufficient, and the recent tests I 
have made will verify this statement. 

"I am convinced the wheat kernel flavor predominates by the 
elimination of 2 percent lard. The two loaves I sent to you, 
with 1 percent lard content, will show the increased 'Wheatie' 
flavor, although the keeping qualities may be slightly lessened 
by the bread's drying out sooner if exposed, but it will not 
mold as soon as the 3 percent lard loaf. 

"It is reasonable to believe that the very large bakery com¬ 
bines will resent a reduction of 8 percent in lard. This will be 
understandable because, due to their tremendous buying power, 
they will receive the necessary allotment to produce the 3 percent 
lard loaf. The smaller competitor will probably be deprived of 
any lard, if some conservation plan is not inaugurated." 

In this connection it is to be noted that decreasing shortening 
or sugar or milk in a formula has the effect of increasing the pro¬ 
portions used of other ingredients so that the net loss of food value 
is the difference between the food value of the ingredient reduced and 
the food value of the added proportions of other ingredients, of which 
flour is the principal one by weight. On this subject, the Director 
of the Commission's Medical Advisory Division states: 

"The reduction of the fat content of bread from 3% to 1% 
and the substitution of 2% more flour will cause the average 
1-oz. slice of bread to provide 3.3 fewer calories. This means 
that in the case of an Individual consuming eight slices of 
bread daily, his caloric intake will be reduced by approximately 
26 calories. Since an ordinary slice of bread supplies between 
70 and 80 calories it will be seen that this deficiency can be 
made up by consuming approximately 1/3 slice more of bread daily 
or an equivalent amount of other foods. Dietary standards are 
customarily computed on the basis of total intake of 3,000 
calories daily, so that the 26 calories represents less than 1% 
of the total intake. Because of these facts it is not believed 
that the reduction of the fat content of bread from 3% to 1% 
represents a significant debasement from the standpoint of its 
nutritive value." 

" * * * Bread made without the addition of fat (shortening) 
or whole milk contains approximately 1% of fat derived from the 
flour. Commercial bakers usually add additional fat to their 
bread mixes, the proportion ranging from one pound of fat per 
100 pounds of flour to around four pounds of fat per 100 pounds 
of flour. Sometimes instead of adding fat as such the bakers 
will use whole milk, which of course adds butter fat to the mix. 
The addition of higher proportions of fat to a bread mix will 
produce a bread having slightly better texture and appearance. 
However, improvement in texture and appearance may also be 
brought about by the use of substances other than fat such as 


18 


skim milk powder, malt syrup, or some particular type of yeast food. 
The addition of larger proportions of fat or milk solids will some¬ 
times result in the use of more water in the bread mix and the re¬ 
tention of a slightly higher proportion of water in the finished 
article. This will, of course, compensate in part for the expense 
involved in using additional fat. 

"The changes in the appearance and texture of the bread which 
are brought about by the addition of fat and other substances to 
the basic ingredients of bread are for the most part comparatively 
slight. Experts in the art of baking can detect them and some¬ 
times the differences are of such degree that an ordinary house¬ 
wife could detect them if cut loaves of the bread were placed side 
by side before her. It is rare, however, that these changes in 
texture and appearance are such that the housewife would seriously 
object to either of any two given brands of bread when one brand 
is purchased and used on one day and another brand purchased and 
used one or two days later without making an actual side by side 
comparison." 

Moreover, as stated by the Commission's Medical Advisor, the 
savings of fat — 

" * * would be of considerable importance at this time since fat 
contains approximately 10% of glycerin, a substance much needed 
for the manufacture of explosives." 

This is important because for some time the housewives of the 
United States have been asked by the Government in the salvage cam¬ 
paign to save as much fat as possible. 

It is impossible from data available to compute the exact savings 
that might be made in the use of sugar, shortening and milk: but by 
applying an average formula to total commercial bread production, how¬ 
ever, it is possible to estimate somewhat roughly the total quantities 
of different ingredients used in commercial baking and to obtain there¬ 
from a more or less rough estimate of possible savings. This estimate 
has been prepared, based on formula percentages reported for white bread 
and total poundages of bread and rolls produced. This, at best, can 
only be regarded as a rough estimate for the reason that total bread and 
rolls produced undoubtedly includes many items made under formulas that 
are richer as well as many made under formulas that are leaner in terms 
of milk solids, shortening and sugar than the best selling loaves of 
white pan bread on which the various bakeries reported. 

The method pursued in the estimate was to weight the percentages of 
each of the three critical materials by the total quantity of bread and 
rolls produced as reported by a total of 465 bakeries consisting of 
420 wholesale, 36 house-to-house and 9 chain store bakeries and, based 
on these weightings, to compute the weighted average percentage of each 
of the items for the sample. These weighted average percentages were 
then applied to a total production figure for 1942 estimated as 18.9 
percent greater than the total commerical production of bread and yeast 
raised products by both wholesale and retail bakers as reported by the 


19 


Bureau of the Census for the year 1939, to obtain the total quantity of 
each of the critical materials used in the production of the estimated 
total production. The increase of 18.9 percent used is the trade’s esti 
mate of the increase since 1939.1/ The estimated production so obtained 
for 1942 is regarded as conservative since the Bureau of the Census col¬ 
lected no data from establishments or plants with products valued at 
less than $5,000 for the year. 

The estimated total production of yeast raised products, for 1942, 
obtained as described above, is 12,423,000,000 pounds of bread which, on 
the basis of 65 percent flour content, would contain 8,074,950,000 
pounds of flour. 

Based on the Commission's sample the average formulas used by the 
different classes of bakers reporting for the September accounting 
period were as follows: 


Company Group 

Number of 
Bakeries 

Weighted Average Formula 
Percentages (Based on Flour) 



Milk 

Shortening 

Sugar 

Big 4 companies. 

56 

3.05 

3.29 

6.40 

Large indeDendent companies. 

81 

4.86 

3.38 

6.37 

Smaller independent companies. 

283 

3.66 

3.18 

5.95 

Total wholesale bakers. 

420 

3.84 

3.29 

6.27 

House-to-house bakers. 

36 

3.33 

3.20 

6.05 

Chain grocery bakers. 

9 

4.12 

3.55 

5.32 

Total all groups. 

465 

3.80 

3.29 

6.21 


Applying the formula percentages for all groups to total flour 
content of yeast raised products of 8,074,950,000 pounds yields the fol¬ 
lowing estimates of the total quantities of the three critical materials 


Milk. 306,848,000 pounds 

Shortening. 265,666,000 pounds 

Sugar. 501,454,000 pounds 


Based on these quantities it is possible to estimate what the criti 
cal material savings would be if total consumption of each were reduced 
by any specified percentage. Such estimates, based on 5, 10 and 20 per¬ 
cent reductions in quantities, and corresponding dollar values based on 
5.75 cents per pound for sugar, 15 cents for powdered milk and 16 cents 
for lard, would be as follows: 


Material 

5 Percent 
(Pounds) 

Estimated Savings 

10 Percent 
(Pounds) 

20 Percent 
(Pounds) 

Estimated Saving-in Materials: 

Milk. 

Shortening.. 

Sugar. 

15,342,000 

13,283,000 

25,073,000 

30,685,000 

26,567,000 

50,145,000 

61,370,000 

53,133,000 

100,291,000 

Estimated Dollar Savings: 

Milk. 

Shortening. 

Sugar. 

$2,301,000 

2,125,000 

1,442,000 

$ 4,603,000 
4,251,000 
2,883,000 

$ 9,206,000 
8,501,000 
5,767,000 

Total. 

$5,868,000 

$11,737,000 

$23,474,000 


1/ Published recently in the Trade Press. 









































20 


The making of savings of the order indicated above would hinge upon 
what would be practicable to do in reducing the quantities of these crit 
cal materials without reducing the nutritive value of bread to such a 
point as to endanger public health. The Army at present uses 6 percent 
milk, 5 percent shortening and only 3 percent sugar to produce a bread 
of high energy content. These percentages are higher for milk and 
shortening, but lower than the sugar content of the weighted average 
formula. Some claim, and possibly this claim is well founded, that the 
milk content should be maintained because milk supplies the enriching 
agent riboflavin, the commercial supply of which is short. It would 
seem, however, that marked savings in the other two critical ingredients 
might be made, and possibly some saving in milk. 

Some bakers state that even greater savings could be accomplished 
without materially reducing the food value or the public acceptance of 
their product, provided, of course, the entire industry participates in 
the saving. The conflict of competitive interest in formulas used is 
believed to be such that the most effective savings can be accomplished 
only by government order. This type of order would be distinctly in 
the direction of a "victory" loaf. 

Under conditions of shortage during World War No. I, Food Adminis¬ 
tration Rules in effect December 1, 1917, affecting bakery licensees 
limited the use of milk shortening and sugar as follows: 

Milk, not to exceed 6 pounds of fresh skim milk from which 
butterfat was extracted, or the equivalent thereof per 196 pounds 
of flour. 

Shortening, not to exceed 2 pounds of compounds containing 
more than 15 percent animal fats, or 2 pounds of vegetable fats,, 
per 196 pounds of flour. 

Sugar, not to exceed 3 pounds of cane or beet, sugar or 3i 
pounds of corn sugar, per 196 pounds of flour.2/ 

■ The limitation of the use of milk, shortening and sugar to the 
amounts specified by the U. S. Food Administration during World War 
No. I would result in reductions equivalent to 21 percent in milk solids 
70 percent in shortening, and 76 percent in sugar, below the weighted 
average formula now in use, as reported by the bakers in this inquiry. 

Section 6. Economies in the Slicing and Wrapping of Bread 

The slicing and wrapping of bread prior to its sale to the con¬ 
sumer is an almost universal practice of some 15 years standing among 
bakers of the United States. Generally, all kinds of bread except rye 
and other dark varieties not widely used by the household trade are 
wrapped. White breads commonly have been wrapped in waxed paper. For 
dark breads wrappers of cellophane or opaque paper with cellophone 
windows have been widely used, but the current shortage of cellophane 
is fast encouraging the use of waxed or paraffin paper. 


2/ U. S. Food Administration Policies and Plan of Operation, Wheat 
Flour and Bread, Dec. 1, 1917. 

FTC LL1909 





21 


In up-to-date machine bakeries the slicing and wrapping process 
is one continuous, automatic operation requiring practically the same 
attendant labor even if the slicing detail were omitted. Consequently 
there would be little saving in eliminating slicing in a shop equipped 
with the latest mechanical improvements other than the cost of power, 
machine upkeep, depreciation, and sharpening and replacing blades. 

One set of blades on a modern machine will slice a half million 
loaves before replacement is necessary, according to a large baker re¬ 
porting to the Commission, as compared with about 10,000 loaves slicing 
capacity of one of the older type machines. Slicing is done by machine 
even in small bakeries not equipped with the newer type slicing or 
other mechanical improvements. In some of these smaller plants there 
would be a greater saving by eliminating the slicing process because 
of the supplemental hand labor required in wrapping. 

The Commission's present investigation shows that 64.30 percent 
of the bakers throughout the country to whom report forms were sent 
sliced their entire output of bread: almost 32 percent sliced between 
90 and 100 percent of their output; and the proportion which sliced 
less than 90 percent was negligible. 

Many bakers have from one to two years supply of blades but it is 
doubtful if they could obtain more of such critical steel products. 

As a war measure, the elimination of slicing would save the baker 
some of his costs of labor, materials and upkeep. He might benefit 
further through Increase in the volume of bread sold because of the 
inefficiency of household slicing. However, savings balanced against 
possible consumer inconvenience might not be sufficent to warrant the 
discontinuance of slicing as long as the supply of blades holds out. 

Pointing out that slicing is a distinct service to the consumer 
which the baker desires to continue in spite of the Inherent possi¬ 
bilities of savings, the Baking Industry War Conference, meeting in 
Chicago, October 20-21, 1942, resolved that "if the machinery and 
metal situation becomes so critical as to demand withholding of sup¬ 
plies — and thus provide a war cause for elimination of slicing — 
then the industry will promptly cooperate with any Government order 
or request." 

Bakers generally reported that only very small savings could be 
obtained by eliminating slicing, but one baker made a careful study 
of possible savings through the elimination of slicing. Based upon 
his figures, the industry saving would be approximately $900,000 per 
annum. 

However, a close relationship exists between slicing and certain 
economies in wrapping. Some kind of wrapping for bread is essential. 
For sanitary reasons alone bread wrappers are justified. This is 
particularly true in the grocery store trade where bread is subject 
to much handling and sometimes to storage in spots where cleanliness 
is not of the highest order. 

FTC LL1909 


22 


There is opportunity, however, for definite economy in the 
wrapping of bread. The use of fancy wrapping has been overdone in 
some instances due to the technological improvements of the last 20 
years in paper making and color printing and to the pressure of 
competition for innovations. Double length full wrappers have been 
used, especially on long sliced loaves, but for the last year or so 
they have been progressively discontinued in favor of an inner 
wrapper somewhat shorter than the loaf plus a single full length 
outer wrapper. A few bakers are still employing full length double 
wrappers on sliced long loaves used by restaurants for sandwich 
making. The remainder generally are using inner wrappers and many 
have shortened their inner wrappers to reduce paper cost. 

Inner wrappers are made of waxed paper and have three main 
functions: sanitation, retarding the inevitable staling process, and 
prevention of "cripples," a certain number of which can be expected 
when bread is sliced, especially in long loaves. 

The Baking Industry War Conference in October recommended the 
discontinuance of waxed inner liners on loaves less than 13 inches in 
length and on longer loaves where they exceed two-thirds of the 
length of the loaf. This conference also recommended the discontin¬ 
uance of waxed paper for double wrapping and for outserts, except for 
label corrections. This action was taken because paraffin, used in 
waxed paper, is becoming a critical war material. 

Possibilities of savings in the use of waxed paper during the re¬ 
mainder of the war period may depend on the outcome of cooperative ex¬ 
periments now being conducted by the paper and baking Industries to 
determine the possibility of using a cheaper grade of paper with a 
lesser paraffin content. A 36-pound paper (23 pounds of paper plus 
13 pounds of paraffin) is normally used by bakers, but If a cheaper 
fiber paper of about 28 pounds weight (18 pounds of paper plus 
10 pounds of paraffin) could be employed, the result would be a 25 
percent saving in both paper and paraffin. However, the successful 
use of this lighter paper would probably mean the elimination of 
slicing and with slicing would go the inner wrapper, leaving bread to 
be packaged unsliced in a single outer wrapper. 

Discontinuance of the use of more than two colors in printing 
any wrapper was also recommended by the conference "because critical 
manpower, metals and ink are used in printing and because two-color 
printing is fully adequate in this time of war." Most of the bakers 
interviewed by the Commission were willing to reduce the number of 
colors on wrappers. Three-color wrappers have been common throughout 
the industry and in some instances wrappers with four and five colors 
were found. Some bakers believed that one color against a white 
background is sufficient. However, if two-color printing were 
generally adopted the saving would be substantial and the Industry 
could still maintain the. identity of its products with reasonable 
"eye-appeal" to the consumer. Some bakers report stocks of wrappers 
printed in more than two colors sufficient to last several months. 


23 


The paper Industry,Is also experimenting with the problem of ink 
and ink coverage on wrappers. If a cheaper grade of wrapping paper is 
to be used changes in the quality of the inks employed may be neces¬ 
sary. 


In its present investigation the Commission obtained statistics 
on the use of wrappers from representative wholesale, house-to-house, 
retail, and chain bakers throughout the country. From the sample of 
the entire country, the percentage of white bread innerwrapped by 
individual bakers as of March 31, 1942, varied from 100 percent down 
to 2 percent. The percentage of white bread innerwrapped as of 
September 30, 1942, ranged from a high of 100 percent down to one- 
twentieth of one percent. The wholesale group in all areas reported 
percentages of bread innerwrapped ranging from 100 percent down to 
2 percent as of March 31, and 100 percent down to one-twentieth of one 
percent as of September 30. The percentages of the house-to-house 
group varied from 100 percent down to 10.9 percent as of March 31, and 
from 100 percent to 4 percent, as of September 30. The chain store 
baker group's percentage of innerwrapping ranged from 100 percent down 
to 2.50 percent as of March 31, and from 100 percent down to 2.34 
percent as of September 30. An adequate sample was not obtained from 
the retail group. 

For the entire sample taken from the country at large, the 
savings estimated as possible by means of eliminating the innerwrapping 
of bread varied for individual bakers from a high of $1.00 to a low of 
$.001 per 100 loaves of bread. For the wholesale group the range was 
from a high of $1.00 to a low of $.001; from $.33 to $.067 for the 
house-to-house group, and from $.1290 to $.0744 for the chain store 
bakers. 

The percentage of white bread double wrapped by individual bakers 
was reported as follows: high, 100 percent, and low, 2.45 percent, as 
of March 31, 1942; and high, 100 percent, and low, 2.84 percent, as of 
September 30. The wholesale group reported highs of 100 percent for 
both periods and lows of 2.45 percent on March 31 and 2.84 percent on 
September 30. The house-to-house group reported a high of 100 percent 
and a low of 59 percent as of March 31, and 55 percent of white bread 
double wrapped as of September 30. 

« 

The savings per 100 loaves of bread estimated by individual 
bakers as possible by means of discontinuing double wrappings were: 
high, $1.00, and low, $.105. The wholesale group's high was $1.00 
and its low, $.105, while the house-to-house group reported a saving 
of $.177. 

Should the situation become sufficiently critical, slicing 
should be eliminated, especially if by its elimination marked savings 
can be made in the quantity of critical paraffin and paper needed for 
preservation and sanitation in the wrapping of bread. 


24 


Section 7 _. Stale Returns 

Stale returns result principally from the competitive device 
commonly known in the bread baking industry as consignment selling 
under which the wholesale baker assumes all responsibility for loss 
incurred in disposing of bread that remains unsold on the counters of 
independent retailers after a specified period of time — usually 
either 24 or 48 hours. 

The principal economic defenses offered for consignment selling 
are that it is the means by which the baker is able to satisfy to 
the maximum degree the consumer's taste for fresh bread and safeguard 
the goodwill attaching to his product by assuring that the retailer 
will not keep bread on his counter until it is so starle or otherwise 
deteriorated as to be unsatisfactory to consumers. 

All branches of the industry agree that stale returns are a 
source of financial loss to bakers and of waste of breadstuffs be¬ 
cause not all stales made can be disposed of for human consumption. 

It is also generally agreed that reduction in stale returns offers 
the greatest single opportunity for saving available to the industry. 
Yet after a year of effort to reduce stale returns through voluntary 
action of the industry itself, information obtained in the present 
inquiry indicates that percentages returned vary widely in different 
markets and that some wholesale bakers in highly competitive markets 
still were taking back excessive percentages of stales ranging up to 
18 percent of bread and rolls sent out during accounting periods 
ending as late as November, 1942. A few bakers in highly competitive 
markets state that percentages of stale returns are greater now than 
a year ago. At the same time the ability of bakers to dispose of 
stales at half price for human consumption is decreasing because, with 
increasing employment, fewer persons are purchasing stale bread. 

Two distinct viewpoints are expressed in the baking industry 
respecting stale returns as a competitive trade practice. The first 
is that taking back stales is a practice necessary to enable the small 
baker to survive in competition with large bakers. The second Is that 
it is a competitive method in the use of which the local wholesale 
baker is at a distinct disadvantage as compared with the large baker 
who, by overstocking grocers for mass display purposes and taking 
back large percentages of stales, competitively forces all other 
bakers serving the market to likewise overstock and take excessive 
losses on stale returns. Those holding this viewpoint maintain that 
large bakers serving many markets have financial ability superior to 
that of local bakers in absorbing excessive losses from stales. This 
superior strength, they claim, lies in the ability of large bakers to 
absorb losses from stale returns incurred in highly competitive 
markets out of profits realized in less competitive areas, whereas the 
local wholesale baker must stand or fall financially on the basis of 
profits or losses made in his local market. It is also claimed that 
many local bakers have been forced into bankruptcy because of losses 
on stale returns competitively forced upon them by larger competitors. 

FTC LL1909 




25 


The strongest proponents of retention of stale returns are large 
baking companies to whom so-called consignment selling and the accept¬ 
ance of stale returns is useful in breaking into or Increasing sales 
in any given market, first, as a means of inducing retailers to stock 
their brands of bread and, second, as a means of advertising appeal to 
consumers through mass displays. In further defense of the practice, 
numerous large bakers.and some smaller ones take the position that the 
elimination of stale returns would injure the business of small bakers 
and benefit the business of large companies because grocers would pre¬ 
fer to stock and sell the widely advertised brands of the big companies 
and would even refuse to stock unadvertised or less widely advertised 
local brands. Proponents of elimination counter by stating that such 
was not the result when return of stales was prohibited during World 
War No. I, and urge its prohibition to eliminate waste of preclbus 
food materials and benefit the local baker by putting him on an equal 
and fair competitive basis with larger, financially stronger companies. 

As a competitive device, the taking back of stales unquestionably 
is useful to wholesale bakers both in breaking into new markets and in 
increasing sales in markets already served. The position of proponents 
is well exemplified by the following quotation from a letter addressed 
by the president of a large baking company to the Chief Economist of 
the Federal Trade Commission, under date of October 2, 1942: 

"My company will do a business this year of approximately 
twenty million dollars. I could never have gotten started in 
this business, from the first day I went out with one horse and 
wagon, were it not for the fact that it was a customary practice 
at that time, and always has been, to exchange bread in the 
grocery store. This practice permits the small baker, who does 
not have public demand and does not have money for advertising, 
to get what we might call a toehold on the counter. By taking 
a little chance of putting a few loaves on the counter for dis¬ 
play purposes, he gradually builds up a business. 

"If the exchange of stale bread were eliminated today, or 
at any time in the future, practically all of the business of 
the grocery stores would go to just a few very large companies 
who are advertising their products constantly to the consumer, 
because the grocer would not want to lose any more than necessary, 
and on those brands that were not called for he would take the 
greatest loss. Along this line you will find in your investiga¬ 
tion that the percentage of stale will vary in different com¬ 
panies according to the amount of advertising done and according 
to the advertising years back of each brand that has built up a 
consumer demand." 

By contrast, the position of numerous but by no means all 
smaller wholesale bakers operating in more limited territories is that 
the total elimination of consignment selling would benefit rather than 
injure the smaller wholesale baker. Local wholesale bakers, it is 
maintained, are able to make bread of high quality and distribute it 
locally at low cost provided they are freed of the competition of 

FTC LL1909 


26 


large companies that often haul bread long distances at high distribu¬ 
tion expense and force its distribution by overstocking grocers and 
taking large losses on stale retu'rns. 

The large baker who wrote the letter quoted above apparently sent 
a copy to an accountant and consultant to a large number of wholesale 
bakers. The consultant's reply, addressed to the. baker, under date of 
October 8, 1942, expresses very well the viewpoint of bakers who favor 
total elimination of stale returns and believe that the interests of 
local bakers would be benefitted rather than injured by such elimina¬ 
tion. The consultant stated in part: 

"The crying need of the baking Industry for years has been a 
more intensive, direct, and dynamic selling effort directed to 
consumers. This selling effort should begin with the advertising 
of the baker and carry straight through the sales organization, 
the grocer and his clerks, to the consumer. There should be no 
lagging pause in our effort to keep the consumer sold on bread 
as the cheapest, as well as the most essential, of all foods. 

If you agree with me as to this basic, fundamental fact, then you 
must see that our selling effort has been stymied, if not stopped, 
by the Inertia of the dealer who has failed to perform a very 
vital part of this necessary, straight-line selling effort. He 
has had no such urge to try to sell consumers on bread because of 
his lack of investment and the threat of possible loss, as would 
be the case if the bread he bought each day were actually his 
property and the necessity were upon him to 'sell out' or take a 
loss. 


"Now, we positively need to tie in the dealers' Interest in 
this bread selling game. We should make them 'sell' bread in¬ 
stead of just 'handle' it. That's what the baking industry needs 
and what it must have if we are ever to rouse the consumer from 
her lethargy or inert interest in bread." 

"I notice you express yourself as being in sympathy with the 
little baker and plead for a continuance of consignment selling, 
so as not to put him at a disadvantage or out of business. Well, 
that's a fine sentiment, but sentiment has little place in 
business or in the general scheme of life. We are, in a practical 
sense, living in a 'make good' world. The law of the survival of 
the fittest is as inevitable as the law of gravitation. This may 
seem a hard philosophy, but we can't escape it without severe 
penalty to ourselves, as well as to our Industry." 

"Now, back to the dealer - I would favor a form of regulation 
by the government such as would make him responsible for the sal¬ 
vage of stale, by having him put his own price on such left-overs 
as he may have. Let the baker code his bread by days; namely, 
Monday, Tuesday, Wednesday, etc., so the consumer may know her¬ 
self when the bread was baked. This would make the grocer re¬ 
sponsible to her for sending her a stale loaf if he was so daring 
as to try to do it. He will be very careful not to disappoint a 


27 


regular customer by sending a stale loaf. Then let him decide 
each day how much bread he wants from each baker, and you may 
depend on It that he will choose his breads from those brands In 
greatest demand. This makes every baker a merchant If he wants 
to stay In business. 

"Thus would be established a fair basis of competition. 

Bread would be 'sold' and not just 'handled' by the grocer, and 
the fellow who got the most business, would be the one who 
DESERVED most of it. There would be no place for the chlseler, 
the whiner, the sympathy-seeker, the cheap cockroach baker, whose 
practice keeps the industry standards down, or who depends on low 
price and discounts for his business. He would have to run the 
gauntlet of the dealer's fear that his bread would not sell. 

"Now, I want to point out, too, that your sympathy for the 
little fellow is inconsistent and paradoxical. On the one hand 
you plead for his right to exist and get established by putting 
bread in on consignment; on the other hand, you know that this 
very policy, as practiced by the big fellows, is putting small 
bakers out of business in every town in the country, by slugging 
the stores in small communities for weeks and months. The 
mortality of small bakers, due to this very practice, is nothing 
short of appalling, so the plea for the little fellow really be¬ 
comes a camouflage for the big baker to continue the practice of 
consignment selling. The tears shed by the big fellows for the 
little fellow are really crocodile tears, after all. There is no 
sincerity back of it at all, and if these facts were known to the 
Federal Trade Commission, the plea for a continuance of the 
practice of taking back stale returns, would fall flat and bring 
suspicion on every other offer of cooperation to the government, 
by the big bakers. 

"The whole practice of taking back stale returns is unsound 
from every logical standpoint. It is unsound economically and it 
is unsound from the standpoint of progress for our industry. 

"In World War I, it was abolished and the bakers made more 
profits than ever before. No consumer was inconvenienced or dis¬ 
appointed; no dealer reported serious loss. Competitive condi¬ 
tions were, manifestly, better throughout the industry, and both 
volume and profits Increased, as statistical records will show. 

"No sound, practical excuse can be offered for the practice, 
based on logical, economic, or ethical consideration. It is con¬ 
tinued only as an habitual abuse based on traditional or purely 
selfish motives. It cheats the grocer (you and I have both driven 
a bread truck and know how easily possible it is to make a few 
dollars a week extra off the grocer); it deceives and cheats the 
consumer; it makes for unfair competition, and finally, it cheats 
the baker and arrests the progress of the industry. 


28 


"I can go along with you on every other phase of your letter 
to Mr. England. Bread racks, two deliveries, and banishment of 
premiums are all minor evils and are sporadic in character. 

Local outbreaks of abuses incident to any of them are mostly 
temporary in their effect, but the stale bread evil is both uni¬ 
versal in practice and in baneful effect." 

Information developed by the Commission in this inquiry indicates 
that the division of opinion is largely, although not wholly, between 
larger companies who wish to retain stale returns as a competitive 
method and smaller local bakers who wish to have it eliminated. 

Several bakers who attended the Baking Industry War Conference in 
Chicago, October 20-21, 1942, state that they strongly advocated 
elimination, but that their viewpoint did not prevail in the confer¬ 
ence which was sponsored by the American Bakers Association. These 
and other opponents of consignment selling are outspoken in the 
opinion that the Conference recommendations were dominated by big 
company viewpoints, as a consequence of which the Conference adopted 
the following report of its resolutions committee on the subject of 
consignment selling: 

"The committee has taken note of the discussion on a pro¬ 
posal for the elimination of stale returns held here yesterday. 

The committee had established the policy of bringing no report 
to the conference on any subject until first hearing from the 
branch meetings. 

"Reports of the branch meetings on this subject clearly 
indicate that any proposal to recommend elimination of stale re¬ 
turns could not pass. 

"Therefore, the committee brings in no recommendation on 
this subject." 

Although thus divided in its opinion, the trade, as already 
stated, generally agrees that the elimination of losses on stale re¬ 
turns offers the largest single opportunity for wartime saving and 
elimination of waste in the baking industry. Under these circum¬ 
stances it is obvious that the trade is powerless to eliminate stale 
returns by voluntary action as a wartime economy measure, notwith¬ 
standing the odvIous waste involved in competitively hauling 
quantities of bread, sometimes over long distances, delivering it to 
stores and subsequently picking it up again and hauling it back to the 
bakery as stales, in the disposal of which further office and selling 
expense is Incurred. 

The argument that stale returns are partially or even wholly dis¬ 
posed of for human consumption either through day old stores or by 
sale or gift to charitable or other institutions loses much of its 
merit when it is realized that as a competitive device, the acceptance 
of stale returns requires such pyramiding of expense which adds to the 
distribution cost both of bread distributed fresh and bread distributed 
to institutions and charity. It may well be that, as suggested by 


29 


some bakers, the Industry could more economically produce some fresh 
bread for institutional use if necessary and sell it at a reduced 
price instead of piling added distribution costs upon its production 
cost before it is finally sold to institutions as stale. 

Furthermore, the financial reports returned to the Commission 
by many bakers show stale losses greater than the profits of the 
companies even in recent accounting periods, notwithstanding reduc¬ 
tions in stale returns voluntarily made by the industry within the 
past year. 

The argument that bread is a perishable commodity that requires 
the acceptance of stale returns to assure its reaching the consumer in 
good condition in order that the baker's goodwill may not suffer is 
based on the assumption that the grocer either will not or cannot 
assume the full responsibility of merchandising bread. Proponents of 
elimination of stale returns point to other products of equal or 
greater perishability which the grocer buys outright and on which he 
assumes the full responsibility of their disposition. 

Under reasonably good handling conditions, bread becomes pro¬ 
gressively stale for a period of at least 4 days to a week without 
deterioration in food value. Under present conditions of consignment 
selling, bread is often from 12 hours to 36 hours old before it is 
delivered to grocers and from 48 to 72 hours old before it is de¬ 
livered to consumers. With reasonable care in his buying, it is be¬ 
lieved that the retailer could so regulate his purchases as to keep 
within these limits. Fresh returns unavoidably made by bakers would 
find a market as stales for human consumption just as both they and 
stale returns are now marketed. Public health would not be endangered 
by the consumption of more moderately stale bread held over by grocers. 

Wastage of stales not used for human food . - Report forms returned 
to the Commission by 347 wholesale plants and 27 house-to-house baking 
plants covering operations during two accounting periods including, 
respectively, March 31 and September 30, 1942 showed total pounds of 
bread and roll sold, total stales returned and total stales not dis¬ 
posed of for human consumption during their accounting periods which 
including March 31 and September 30, 1942, as shown below. 




March 31 Period 

September 30 Period 

Type of 

Operation 

Pounds 

Percent 

Pounds 

Percent 


339,864,239 

100.00 

376,357,154 

100.00 

Total stales 
Total stales 
human food 
House-to-House 
Total stales 
Total stales 
human food 

Total Wholesale 

returned. 

19,511,855 

5.74 

18,288,596 

4.86 

not used for 

6,921,699 

2.04 

8,704,401 

2.31 

- Total sold. 

27,862,513 

100.00 

29,096,771 

100.00 


1,490,081 

5.35 

1,507,360 

5.18 

not used for 

143,041 

0.51 

192,811 

.66 

and House-to- 




House 








367,726,752 

100.00 

405,453,925 

100.00 

Total stales 
Total stales 
human food 


21,001,936 

5.71 

19,795,956 

4.88 

not used for 

7,064,740 

1.92 

8,897,212 

2.19 


























30 


Both wholesale and house-to-house bakers sold more bread and rolls 
In September than In March. Both also showed reduction in the percent¬ 
ages of bread disposed of as stales. Notwithstanding these reductions, 
however, both showed Increased percentages disposed of for uses other 
than human food. This showing is in accordance with statements made 
by many bakers that although they have reduced their percentages of 
stales, the market for stales for human food becomes narrower as unem¬ 
ployment decreases. 

In considering the showings of the tabulation it is to be realized 
that wholesale and house-to-house bakers make stales in somewhat dif¬ 
ferent ways. Bread may become stale in the hands of wholesalers as the 
result of bakery overruns resulting from inability to fit production 
to fluctuations in daily demand. The bulk of wholesale bakery stales, 
however, results from taking back bread in connection with consignment 
selling. House-to-house bakers face much the same difficulty in 
fitting production to daily demand. Their stales, however, result 
mainly from the fact that drivers must carry some excess stock over 
sales daily in order that a reasonably full line may be offered to the 
last customers on routes. 

Average percentages of stales to total sendout did not differ 
greatly as between the two types of bakers in either of the periods. 
House-to-house bakers, however, showed much greater ability to dispose 
of their stales for human food and therefore without outright waste of 
foodstuffs. For the house-to-house group only about 10 or 12 percent 
of stales were not sold for human food whereas considerably more than 
a third of those made by the wholesale group were not so used and may 
therefore be considered as wasted. 

On the assumption that the percentages not used for human con¬ 
sumption are typical, a rough estimate of the actual wastage of food¬ 
stuffs involved may be made based on a conservative estimate of 
12,015,000,000 pounds as the production of bread and yeast-raised 
products in 1942. This estimated total is based on a 15% increase 
over the quantities reported by the Bureau of the Census for 1939 for 
wholesale and retail bakers. Using the percentage of 2.31 for whole¬ 
salers bakers in September, 1942, and an estimated total of 
10,337,000,000 pounds of bread and yeast-raised bread products made 
by wholesale bakers and combined wholesale and retail bakers, an annual 
quantity of 238,784,000 pounds of stale bread was produced by this 
group which was not used for human consumption. A similar estimate 
based on 0.66 percent and an estimated production of 1,678,000,000 
pounds for retail bakers would indicate that 11,075,000 pounds of 
stales produced by house-to-house bakers were wasted so far as human 
consumption is concerned. Based on these estimates, the total 
quantity wasted for the Industry would roughly be 250,000,000 pounds 
per annum which, based upon the September, 1942, cost of baking and 
wrapping, would aggregate an industry loss of $11,850,000. 

This quantity of bread would furnish a ration of 1/3 pound to 
each of the country’s total population for about 5-1/3 days or a 
similar ration for a full year to 2,055,000 persons. 

FTC LL1909 


| 


31 


Since some bread must necessarily become contaminated or so 
soiled in the process of manufacture and distribution as to be unfit 
for human food, it is Impossible to wholly eliminate disposal of stales 
for uses other than human food. Every effort, however, should be made 
to reduce such wastage to a minimum, as well as to reduce the quantity 
made largely through consignment selling which ultimately is sold for 
human food at about half price, thereby not returning to the baker its 
cost of production and distribution. 

Conclusion . - For reasons reviewed above, the Commission strongly 
recommends that consignment selling and the return of stale bread be 
eliminated in the wholesale baking trade by government order for the 
duration of the war. 

The industry urges that to make such an order effective would 
require that regulations be drawn to prevent evasion by both bakers 
and retailers, either directly or by subterfuge. The order would 
necessarily have to be so designed as to provide severe penalties, 
possibly by both fine and Imprisonment, for both baker and retailer. 

It would have to be so drawn as to place the responsibility squarely 
upon the retailer to see that bread delivered was in good condition, 
and to prohibit returns altogether, because to permit any returns, 
even of damaged loaves, opens the way to evasion. Experience during 
World War No. I was such as to indicate that subterfuges to be 
guarded against would include repurchase of bread from retailers by 
any individual baker or baking company or its officers, employees or 
agents, including subsidiaries, affiliated companies or individuals 
acting for or under subsidy or other arrangement by the wholesale 
baker, with penalties running against all concerned. It is believed 
that such an order would be so generally accepted by the trade as not 
to impose an impossible policing problem. 

Section 8_. Savings Through Standardization 

Incidence of standardization . - In taking steps to attain 
economies through standardization and reduction in number of kinds, 
weights, dimensions, and formulas under which bread and rolls are 
baked, two Important facts are to be taken into consideration. The 
first is that standardization will affect the businesses and operations 
of different types of bakers in differing degrees, and the second is 
that an important collateral effect of standardization will be reduc¬ 
tion in competition between different sections of the industry which 
will favor further concentration of production and control of com¬ 
mercial bread baking by large companies. 

Growth of large wholesale baking companies has been based largely 
on the production and distribution in volume of a few kinds of 
standardized products, sometimes with only one basic formula for each 
kind of bread and rolls (white, whole Wheat, rye, etc.) and with each 
kind produced in a small number of styles, weights, shapes, and 
dimensions of loaves and rolls,. Such production permits maximum use 
of machine processes to produce bread at minimum cost per unit. 






32 


Smaller wholesale bakers pursue much the same policy with respect 
to volume items and, In addition, often bake specialties that sell In 
smaller volume, often at higher prices per pound or other unit, but 
also often are more costly to produce because special processes and 
handwork are necessary. Thus, the smaller wholesale baker tends to 
become a baker of longer lines of less closely standardized products, 
especially if he caters to restaurants and other eating places that 
feature breads and rolls having distinguishing characteristics. 

Serving this trade often means the baking of many small batches of 
dough made up by hand processes in many sizes, shapes, flavorp, and 
other characteristics. 

The house-to-house and the strictly retail baker likewise tend to 
become specialty bakers to their trade in a somewhat similar way. 

Local bake shops which, because of small volume, cannot advantageously 
afford extensive investment in machinery, often find it cheaper to 
purchase their requirements of standardized products from wholesale 
bakers and confine their largely hand operations to the production of 
specialties selling at sufficiently high prices to cover their cost of 
producing on a smaller scale by hand processes. 

Obviously, the possibilities of standardization and elimination 
of products are greatest for the specialty baker who fills in the 
variety of products not made by the volume wholesaler, but does so 
by the expenditure of larger amounts of hand labor per unit of pro¬ 
duction. But to standardize the products of such concerns down to 
the same level as their big wholesale competitors often would require 
that they compete on a hand labor basis with the mechanized production 
of the big companies. To the extent that they were unable to compete 
on a cost and price basis in the production and sale of standardized 
products, the small baker would be forced out, leaving the entire 
market to the mechanized wholesale companies. It seems obvious that 
the monopolistic implications and tendencies of strict standardization 
should be considered in determining the nature and' extent of steps to 
be taken in standardizing production and eliminating bread and roll 
specialties. 

Another point to be considered is whether manpower saved by 
standardization in the baking industry may not be lost because restau¬ 
rants and other eating places employ bakers to produce, at greater ex¬ 
penditure of man hours, the specialties which they wish to feature on 
their menus. This tendency, of course, might be guarded against by 
prohibiting the baking of eliminated formulas, styles, etc. of bread 
and rolls in eating places or bakeries operated in connection there- 
wi th. 


Reduction in kinds of bread . - In response to a question as to 
the possibility of making savings by reducing the number of "kinds" 
(white, whole wheat, cracked wheat, rye, raisin, etc.) of bread baked, 
practically one third of the wholesale bakers interviewed by repre¬ 
sentatives of the Commission stated that they have eliminated one or 
more kinds, within the past year and practically half indicated that 
they have made or can make no reductions. 



33 


Some of the reductions made were eliminations of kinds of bread 
which sold only in small volume with excessive returns of stales. 

Others were made because particular materials, such as raisins, dates, 
seeds, or other Ingredients, either were not available, or were avail¬ 
able only at such excessive cost as to cause the baker to eliminate 
the particular "kind" of bread. A considerable number indicated that 
the eliminations made had reduced their lines to one variety of each 
kind. Others were still making two white breads or two or more rye 
breads, but thought that their lines were down to the minimum where 
they could not make further reductions in kinds without loss of 
business. This last opinion also appeared to be held by many of 
those who had made no reduction. 

The number who were seriously considering further reductions as 
an economy measure was negligible. Less than 1 in 10 of those inter¬ 
viewed made answers indicating that further economies might be made 
through additional eliminations. Of these about a third Indicated 
that further eliminations would be desirable, another third indicated 
that further eliminations would result in economies gained only at the 
expense of loss of sales and the balance indicated still further the 
competitive aspect of the matter by stating that they could not afford 
to make further elimination unless their competitors also did so. 

Companies that have made no reductions include some of both the 
type of wholesale bakery that seeks large volume on a few standardized 
varieties of bread, and the type that makes numerous specialties 
which, in some cases, constituted the bulk of their volume. Elimina¬ 
tions made ranged from 1 to 5 kinds (such as raisin, rye, pumper¬ 
nickel, soybean, cracked wheat, cheese, poppy seed, Swedish rye, etc.). 
In some instances "kind" was interpreted to mean sizes and shapes of 
loaf, in which case eliminations made ran far higher ranging up to 
15 or more. 

Much appears to have been done. Possibilities that still remain 
appear to be considerable, especially for variety and special bread 
bakers. The latter group, however, point out that further eliminations 
of items such as home loaf, French bread, pumpernickel, Swedish and 
other special ryes, fruited and seeded breads and the like would re¬ 
sult in sharp decrease in the volume of their businesses. 

Number of "varieties" of bread and rolls baked . - Bakers were re¬ 
quested to report, among other things, the weight of each loaf of 
white, rye, whole wheat and raisin bread baked (a) for home use and 
(b) for restaurant use. A similar question was asked respecting 
varieties of rolls. Under these questions, each size of plain and en¬ 
riched loaf becomes a separate "variety" of bread. About 4 out of 5 of 
the plants that returned schedules in time for tabulation for this re- 



34 


port furnished this information. The showings as to number of vari¬ 
eties reported for each of the principal kinds of home loaves are 
shown below: 


Number of plants baking the designated 

varieties and kind of home bread 


Varieties 

baked 

White 

Rye 

Whole Wheat 

Raisin 

1 

66 

269 

188 

203 

2 

90 

67 

127 

15 

3 

97 

22 

48 

4 

4 

67 

6 

30 

2 

5 

45 

7 

11 

- 

Over 5 

65 

7 

5 

- 

Total plants 

430 

378 

409 

224 


The showing is that a considerable number of plants reporting 
made only 1 or 2 varieties. These often were large companies that 
specialize in the production in volume of a few kinds and types of 
bread. At the other extreme are specialty bakers often making five or 
more varieties of some of the different kinds. For raisin bread, 
however, none of the companies made more than four varieties. The 
maximum diversity in varieties made is shown for white bread of which 
65 plants made more than five varieties. 

The showing for restaurant breads is as follows: 


Number of plants baking the designated 

varieties and kind of restaurant bread 


Varieties 

baked 

White 

Rye 

Whole Wheat 

Raisin 

1 

70 

131 

108 

92 

2 

74 

82 

79 

31 

3 

98 

50 

74 

13 

4 

65 

21 

25 

3 

5 

31 

7 

13 

- 

Over 5 

46 

22 

19 

2 

Total plants 

384 

313 

318 

141 


Here again there is a showing of considerable diversity with con¬ 
siderable numbers of the plants baking more than 5 varieties of all 
except raisin breads. 






















35 


For rolls, the general practice Is to bake a far greater variety* 
made from each kind of dough (white, rye, whole wheat, etc.) than for 
bread, as Is shown In the following tabulation: 


Number of kinds made 

Number of plants making 

1 to 5 

186 

6 to 10 

139 

11 to 15 

47 

16 to 20 

15 

21 to 25 

7 

26 to 30 

6 

Over 30 

6 

Total plants 

406 


Many bakers Interviewed by the Commission's examiners indicated 
that they could make savings In operating costs by reducing the number 
of kinds and styles (varieties) of bread and rolls baked. Those who 
were baking only 1 or two varieties of each kind of bread, and less 
than 5 varieties of rolls generally did not feel that they could effect 
much saving through eliminations. 

Savings by reducing "varieties ". - Two questions in the report 
form sent to bakers requested estimates of dollar savings based on the 
accounting period including September 30, 1942, which would result: 

(1) if white, rye, whole wheat and raisin type breads baked were 
limited to one variety of each kind of bread and (2) if the number of 
varieties of rolls (exclusive of sweet rolls) werp reduced to a mini¬ 
mum number to be specified by the baker. Separate estimates of dollar 
savings were requested for savings (1) on bread for home consumption, 

(2) on restaurant breads and (3) on rolls. 

A total of 104 bakeries prepared estimates of savings that would 
be effected in their operations if they reduced their varieties in the 
manner outlined. In most instances the number of rolls (exclusive of 
sweet rolls) to which they felt they could reduce ranged from 3 to 5. 

A few felt that they could reduce to 1 or 2, while a few others felt 
that they could not well reduce to less than from 9 to 12, and one 
gave 16 as the minimum number to which he could reduce. A subsidiary 
of a large company specializing in the manufacture of restaurant rolls, 
reported making 73 varieties of rolls. The parent company stated that, 
on an industry basis, rolls might be reduced to two varieties and 
sizes for home use and five for restaurant use. 

The 104 bakeries reported possible savings in cost based on their 
accounting period including September 30, 1942, distributed as follows: 


Kind of product 

Saving 

Home bread 

$28,274 

Restaurant bread 

6,739 

Rolls 

12,498 

Total saving 

$47,511 













36 


The 104 plants reporting these possible savings by reducing 
varieties produced a total of 117,316,938 pounds of bread and rolls 
during the period and had gross sales of $8,896,195. The savings re¬ 
ported when spread over this volume of business would amount to 4.05 
cents per hundred pounds of bread and rolls produced, or approximately 
.04 cent per pound. Based on gross sales, the saving would amount to 
about .53 cent per dollar of sales. 

Savings of this order, of course, could be made only by companies 
at present making more than one variety of each kind of bread or than 
the minimum of 3 to 5 kinds of rolls. Such reduction in varieties 
would mean a high degree of standardization in home bread and rolls on 
which commodities the reports indicated the bulk of the savings could 
be made. The bulk of eliminations would fall on the specialty baker 
who often is the smaller wholesale baker to whom fancy or special 
breads and rolls is an important part of total business done. 

Since the baking of many varieties is a distinctly competitive 
practice in the industry, there would be great reluctance in the trade 
to reduce so sharply unless by government order affecting all bakers 
alike. 

Sharp reduction in the number of varieties of bread and rolls 
would not necessarily mean standardization to a single victory loaf 
formula, provided bakers were permitted to choose the types and sizes 
they would produce. This choice might be subject to restrictions as 
to maximum percentages of critical materials that may be used in any 
formula. In this way, such economies as are possible from limiting 
varieties made by any one baker would be gained and still provide a 
selection of breads to the housewife. Such specialization by partic¬ 
ular bakers might also offer opportunity for further savings in 
rubber, gasoline and labor by arrangements under which two or more 
bakers making breads and rolls of differing characteristics might join 
in delivering these products with the same trucks or through a single 
delivery agency. 

Section 9. Sizes and Weights of Loaves of Bread 

The number of different weights of loaf bread of the same kind 
varies in the different markets and even with different bakers in the 
same market. As stated in the Commission's report prepared for the 
Office of Price Administration on the bread baking industry, "some 
markets are spoken of as ’one-size,' 'two-size' or 'three-size' 
markets depending upon the number of weights in which bread is pre¬ 
dominately sold." In many markets numerous different weights are 
baked, notwithstanding the efforts of some bakers to standardize and 
reduce the number of weights baked for any particular kind of bread. 
For instance, in the Boston market the best selling weights baked by 
various bakers were reported to be the 20-oz. loaf, which seemed to 
predominate, and the 13-oz., 18-oz., 19-oz. and 24-oz. weights. 
According to the report, 7 bakeries in the Baltimore market "reported 
9 best selling breads made in 19 different weights ranging from 13 
ounces to 24 ounces per loaf, baked weight." 

FTC LL1909 




37 


Similar variations in the baked weight of loaves reported as best 
sellers were found to exist in other markets. The possible evils of 
permitting so many different weights of loaf bread have been recognized, 
and some States have passed laws prescribing specific weights and re¬ 
quiring labeling to show exact weight. 

State Laws Prescribing Weights and Sizes of Loaf Bread . - In the 
interim report, (November 16, 1942) to the Director of Economic 
Stabilization, the Commission pointed out that any attempt to fix 
standards for weights of loaf bread may conflict with state laws; 
however, all States having laws regulating the weights of bread permit 
the manufacture and sale of loaves weighing 1 pound, H pounds and 
2 pounds, and many of them also specifically permit loaves weighing 
"multiples of one pound." It may therefore be assumed that a Federal 
Order fixing the weights of loaves of white bread at one, one and 
one-half and two pounds would not authorize any size prohibited by the 
laws of any State. The following tabulation lists States having laws 
relating to weights of loaf bread and the standard weights for each 
State: 


State Permissible Weights in Pounds 



1 

2 

3/4 

1 

li 

ii 

Multiples of 1 lb. 

Arizona. 



X 


X 

X 

California..•. 



X 


X 

X 

Connecticut. 



X 


X 

X 

District of Columbia. 

X 


X 


X 

X 

Illinois. 


X 

X 

X 

X 

X 

Indiana. 


X 

X 

X 

X 

X 

I owa. 


X 

X 

X 

X 

X 

Michigan. 


X 

X 

X 

X 

X 

Minnesota (none) 







St. Paul. 



X 


X 

X 

Montana. 



X 


X 

X 

Nebraska. 

X 


X 


X 

X 

North Dakota. 



X 


X 

X 

Ohio (none) 







Cleveland. 



X 


X 

X 

Youngstown. 



X 


X 


Oregon. 



X 


X 

X 

South Dakota. 



X 


X 

X 

Texas. 



X 


X 

X 

Washington. 



X 


X 

X 

Wisconsin. 



X 


X 

X 


The figures in this tabulation for all of the States and munici¬ 
palities except District of Columbia, Illinois, Michigan and Nebraska 
were taken from Bakers Weekly, November 5, 1938. The laws of the 
District of Columbia, Illinois, Michigan and Nebraska have been con¬ 
sulted, and it is believed they are typical of State laws regulating 
weights and sizes of loaves. 

































38 


The laws of both Illinois and the District of Columbia require a 
label to be attached to each loaf of bread or wrapper showing the 
weight thereof in pounds or fractions. 

Other States have laws regulating the baking industry containing 
provisions similar to those of the District of Columbia and Illinois 
varying somewhat as to the specific weights permitted. 

Use of Varying Weights and Sizes in an Unfair and Deceptive 
Manner . - Instances have come to the attention of the Commission where 
the practices of varying the sizes and weights of loaves of bread have 
been used to obtain competitive advantages by some of the large whole¬ 
sale bakers in highly competitive markets. Two of such practices 
coming to the attention of the Commission were, first, changing the 
unit price of loaves of the same size in highly competitive areas 
without making a corresponding change in the price in areas where com¬ 
petition was not so keen, and second, changing the size or the weight 
of the loaf in certain markets without changing the unit price. Where 
such practices have involved interstate commerce, investigations have 
been made and such corrective ac-tion has been taken as was warranted 
by the facts. 


Bakers manufacturing and distributing bread in the District of 
Columbia also sell bread in nearby Virginia and Maryland. There is 
a market in Virginia points near Washington, D. C., for 12-oz. loaf 
bread, and a market in nearby Maryland for a 20-oz. loaf of bread. 

An application for complaint (File No. 1-16415) was filed with 
the Federal Trade Commission involving, among other things, the 
alleged violation of the baking laws by certain District of Columbia 
bakers who manufactured white bread in 12-oz. loaves and 20-oz. 
loaves. The sale of both these sizes in Washington, D. C., was pro¬ 
hibited by law. Investigation developed facts indicating that neither 
the 12-oz. loaf nor the 20-oz. loaf was offered for sale in the District 
of Columbia, but were manufactured in the District for sale, and were 
sold, in nearby points in Maryland and Virginia, consequently the appli¬ 
cation was closed without prejudice. 

The Commission has had a number of occasions to consider alleged 
price discriminations in the sale of bread in interstate commerce. 

Some of the cases have grown out of the practice of cutting the price 
of bread by increasing the weight of the loaf in certain localities 
without making a corresponding increase in price. Other cases have 
grown out of the practice of cutting the price of the same weight loaf 
to customers in certain localities, without making corresponding price 
cuts to other customers, under the claim of meeting local competition. 

In Docket No. 3740 the respondent, Metz Bros. Baking Company, of 
Sioux City, Iowa, was charged with discrimination in the wholesale 
price of bread to customers in certain markets as compared with the 
price of bread of the same quality baked in the same plant to cus¬ 
tomers in other markets. This was alleged to have violated the 
Robinson-Patman Act. The respondent operated bakeries in Sioux City, 
Iowa, and in Sioux Falls, South Dakota, and sold 24-oz. loaves of 

FTC LL1909 




39 


white bread to customers located in South Dakota and Minnesota at the 
same price at which respondent sold 20-oz. loaves to customers located 
in Iowa for the alleged purpose of eliminating competition in the 
Minnesota and South Dakota markets. The Iowa State laws permitted 
bread to be manufactured and sold in 20-oz. loaves, whereas the laws 
of both South Dakota and Minnesota prohibited the sale and distribu¬ 
tion of 20-oz. loaves. The law in Iowa permitted "3/4 lb., 1 lb., 

1* lbs., 1^ lbs., and multiples of 1 lb."; the Minnesota law provided 
that bread may be sold and distributed weighing "1 lb., H lbs., 
double, triple, quadruple, 4J lbs., quintuple, sextuple, and in no 
other way." The South Dakota law provides for the manufacture of one 
pound, one and a half pounds, or "any other weight which is a multiple 
of one-half pound and no other way." 

The investigation of the complaint showed that the proposed re¬ 
spondent's wholesale price for the 20-oz. loaf in Iowa was 8/ per 
loaf, while its price for the 24-oz. loaf was also 8/ in Minnesota and 
South Dakota. The bread sold in both the Iowa market and the Minnesota 
market was of the same quality and baked in the same plant at Sioux 
City, Iowa. It should be noted, furthermore, that the 20-oz. loaf 
which was sold for 8/ in the vicinity of Sioux City, Iowa, involved 
ohly short hauls while the heavier 24-oz. loaf, which was sold in the 
Minnesota market also for 8/, involved a much longer haul. 

One of the applicants in Docket No. 3740 furnished information 
from which he computed the difference in receipts from 100 pounds of 
dough by selling a24-oz. loaf at 8/ and a 20-oz. loaf at the same price. 
The difference was computed to be approximately $1.00 per 100 pounds 
of dough not including the difference in the cost of hauling. The 
Commission found that the above prices (8tf per 24-oz. loaf to customers 
in Minnesota and 8/ for a 20-oz. loaf to customers in Iowa for bread 
of the same quality from the same bakery) violated the Robinson-Patman 
Act and issued an order on December 28, 1938, requiring the respondent 
to discontinue the practice. 

There is considerable evidence that the practice of increasing 
the weight of the loaf without increasing the price has been used also 
to obtain competitive advantage by large wholesale bakers in highly 
competitive markets where interstate commerce was not involved. It 
appears that in the Norfolk-Newport News market large wholesale bakers 
with plants located in Norfolk are now transporting 20-oz. loaves of 
bread from their plants in Norfolk to Newport News for sale to dealers 
at the same price at which a 16-oz. loaf is sold in Norfolk. 

In most trade areas there is keen competition in the baking 
industry, although there is reason to believe that here and there 
wholesale bread prices have been established and maintained by col¬ 
lective agreement among the bakers. Perhaps the keenest competition 
is to be formed between the wholesale bakers and the grocery chains, 
who bake their own product. In general, the retail price charged by 
the grocery chain to the consumer is equivalent to the wholesale 
price for the same weight loaf charged by the wholesale bakers to his 
retailer customer. Since the independent retailer usually realizes 
a profit of about two cents a loaf, the bread sold to him by the 


40 


wholesale baker ordinarily reaches the consumer at that much higher 
price than chain grocery bread. 

It will be seen that the chain grocer Is a very Important factor 
In competition In the bread Industry. An Insufficient number of re¬ 
ports from chain stores were received In time for inclusion in this 
report. These reports included only the costs to bake and wrap and 
total costs would be difficult of ascertainment, at least insofar as 
delivery and selling costs and general and overhead costs are con¬ 
cerned, since bread is handled as one of the very many items sold at 
each chain store. 

Limiting sizes and weight used as a means of fixing prices . - 

Attempts by members of the industry to combine to limit sizes and 

regulate weights of loaves of bread as a means of controlling prices, 

where interstate Commerce was involved, have resulted in prosecution 
under the Anti-trust laws. 

Following investigation of conditions existing in the baking 
industry in the Philadelphia market, the Department of Justice secured 
indictments on January 9, 1941, in the United States District Court 
for the Eastern District of Pennsylvania, against eleven corporations 
and thirty-three individuals alleging conspiracy in restraint of trade 
in violation of the Sherman Anti-trust Act through agreements to limit 
and regulate the sizes and weights of loaves of bread and to fix and 
maintain uniform prices. 

There were two indictments alleging and reciting specific instances 
of "an unlawful combination and conspiracy arbitrarily to limit the 
sizes and regulate the weight of loaves of bread sold and offered for 
sale and to fix, determine, establish and maintain uniform and non¬ 
competitive prices for the sale of bread in said interstate trade and 
commerce in all or substantial portions of the States of Maryland, 
Delaware, New Jersey and the Commonwealth of Pennsylvania." 

The defendants entered pleas of Nolo Contendere and paid fines 
aggregating $85,000. 

Variations in Sizes of Pans . - Attempts to regulate and limit the 
weights of loaves of bread which may be sold may involve some dif¬ 
ficulty with respect to the sizes of pans on hand and used by bakers 
which have manufactured many different weights of loaves. A wide 
variety of sizes and shapes of pans are used in baking the different 
weights and textures of loaves made from a given formula, each baker 
using the sizes and shapes regarded as most advantageous from a com¬ 
petitive standpoint.. 

In its report to the Office of Price Administration the Commission 
called attention to the variety of sizes of pans in which the best 
selling loaves of household bread were baked in the different markets 
and submitted the following tabular statement showing typical varia¬ 
tions in certain markets. 




Dimension of pans in which best selling loaves of similar weight were baked 


41 












42 


Some of the State laws have prescribed not only the weights of 
loaves which may be sold, but also the size of pan which must be used 
in baking each such loaf. 

The laws of Michigan prescribe the following weights of loaves 
and maximum dimensions of pan In which each loaf must be baked: (North¬ 
western Miller July 23, 1941). 


Weight in ounces 

Length 

Width at Top (inches) 

12 

8 

4 

16 

10 

4 1/2 

20 

12 1/4 

4 1/2 

24 

15 

4 3/4 

32 

16 

4 3/4 


Oregon has a law authorizing the pound, pound and one-half, two 
pound and three pound loaves of bread prescribing that the one-pound 
loaf shall be baked in a pan 9 x 4-1/2", the one and one-half loaves In 
pans 12i x 4?", the two pound loaf in a pan 16 x 4 x 4" and the three 
pound loaf in a pan 20 x 4| x 4|". It also provides for a twin loaf 
weighing one and one-half pounds to be baked in a pan 7x8", and a one 
and a half pound Pullman loaf in a pan 13 x 4 x 4". (Bakers Weekly, 
Nov. 3, 1938) 

The State of Washington authorizes the one pound loaf baked in 
9 x 4-1/2" pan and the one and one-half loaf baked in 12i x 4i" pan. 

It also authorizes Pullman Bread in one pound loaf baked in a pan 9" 
in length and containing 144 cu. in.; the one and one-half pound loaf 
baked in a pan 13" in length and containing 208 cu. in.; a two pound 
loaf baked in a pan 16" in length and containing 256 cu. in.; and a 
three pound loaf baked in a pan 20" in length containing 405 cu. in. 
(Bakers Weekly, Nov. 5, 1938.) 

From the above tabular statement and references to State laws it 
will be noted that a pound loaf of bread may be baked in pans ranging 

from 9 to Hi inches in length and from 4 to 6 inches in width. 

Loaves weighing one and a quarter pounds may be baked in pans ranging 

from 9 to 15 inches in length and 4 to 5i inches in width. In the 20 

to 21 oz. loaf group were two sandwich-type loaves respectively 14 and 
15 inches in length, both baked in pans 4 inches wide. A loaf weigh¬ 
ing one and a half pounds (24 ounces) may be baked in pans of 12i 
inches in length as required by the laws of Oregon and Washington or 
15 inches as prescribed by the laws of Michigan. 







43 


With respect to the dimensions of pans in which loaves of the 
same weight may be baked it should be noted that one-pound loaves were 
baked in pans: 



9i 

X 

5i" 

) 


10 

X 

4|" 

) 


10 

X 

4-5/8" 

) 

10- 

-5/8 

X 

5-5/8" 

) 


9^- 

X 

6" 

) 

10- 

-5/8 

X 

6" 

) 


In Kansas City, Mo. 


In Omaha, Nebr. 


x 5 , „ } In Davenport, Iowa 

10i x 4-5/8" ) 

11-3/4 x 4" ) In Atlanta 

10 x 4i" ) (by State Law in Michigan) 

9 x 4§" ) (by State Law in Oregon and Washington) 


Other loaves of equal weight were shown to have been baked in 
still larger variety of sizes of pans. It ms shown by the above 
tabular statement that the 20 to 21 oz. loaf was baked in 18 different 
dimensions of pans ranging from 9 x 4-3/4 inches to 15 x 4 inches. 

Standardization of weights of loaves would have little effect on 
costs. It would however assure the consumer greater ability to pur¬ 
chase like quantities of bread by weight under different brands in 
territories where weights were not fixed by law, and where, therefore, 
bakers make what is equivalent to changes in price of less than a cent 
per loaf by varying loaf weights. The latter, therefore would be the 
principal reason for standardizing loaf weights under price ceilings. 
If such action is considered desirable it would appear that standard 
loaf weights of 1 pound, 1| pound and multiples thereof generally could 
be baked in pans at-present in use. 

Section 10. Percentages of Labor Turnover and Other Labor Problems 


Director James F. Byrnes requested that the Commission obtain the 
facts so as to disclose "the possibility of lowering profit margins and 
the payment of workers and officials." Bakers in all parts of the 
country were requested to furnish information with respect to possible 
savings in labor. The labor situations and difficulties which the 
baking industry managers called attention to may be grouped into five 
classes, as follows: 

(1) Those arising out of attitudes of labor that are or have been 
more or less general, such as, (a) policies looking to the preservation 
of jobs and "make-work" policies, which express themselves in resist¬ 
ance to the consolidation of unprofitable delivery routes or in limita¬ 
tion of output, and (b) the practice of many employees, especially 
recent acquisitions, in frequent failure to report for work and in 
other ways; 

FTC LL1909 




44 


(2) Those arising out of short working week coupled with the re¬ 
quirement on the part of the employer to pay at the rate of time-and- 
one-half for overtime work, which it is claimed offers a powerful 
inducement to the employees to slow the pace during regular working 
hours; 

(3) Problems arising out of labor contracts which (a) hamper the 
best utilization of available force, especially when the plant is 
short-handed, (b) which hamper discipline, or (c) which result in 
Jurisdictional strikes or threat of strikes; 

(4) Those arising out of Interpretation of routemen’s territorial 
rights, resulting in some instances in what are claimed to have been 
unearned commissions to routemen for bread delivered under contract 
with the Government to military cantonments; and 

(5) Those arising out of a greatly increased rate of labor turn¬ 
over induced, in those communities in which there have been rapidly 
expanding war-work industries, by the relatively high wage rates those 
industries have been able to offer in order to expand their labor forces, 
and from the drawing of this labor supply away from ordinary peace-time 
industries. 

Of these five classes of labor problems, the greatly intensified 
rate of labor turnover is the most important, not only because of its 
immediate effect but because the situation created by it furnishes a 
special and abnormal opportunity for developing situations of the first 
three classes. 

In many communities, plants engaged in the production of products 
for war use and for war supplies or materials have been expanded and 
require greatly augmented labor forces to man them. During that 
period in which they were building up these labor forces, the labor 
situation in the already established peace-time industries, including 
the baking Industry, has been greatly disturbed. The only means avail¬ 
able to the war-work industries for inducing workmen to come to them 
from other employment was to offer and pay wage rates high.enough to 
constitute an adequate inducement to change employment. 

It was reported by baking company managers in some of the com¬ 
munities, that war-workers would show their friends and acquaintances 
earnings from $80 to $110 per week. Naturally these friends and 
acquaintances who, in the baking industry, were receiving $40 per week 
or less, sought the more remunerative employment. 

The result was progressive, affecting the labor situation in all 
industries within the area of influence of the war-work industries. 

Even though not all of the seekers obtained such highly remunerative 
employment in the war-work industries directly, some of them did so. 

Their success in this respect created vacancies in the forces that 
they quit. The employers of these forces sought to fill these 
vacancies. Eventually some of the baking companies sought to re¬ 
plenish their denuded forces by hiring women for certain classes of 


45 


work formerly performed traditionally by men; but to the extent that 
these vacancies were not filled by hiring women who were not previously 
employed in industry or business, they could be filled only by hiring 
workers away from other employment in the same Industry or other in¬ 
dustries; and this could be accomplished only by offering higher wage 
rates than the new employees had been obtaining previously. The suc¬ 
cess of these employers in obtaining replacements in this manner 
created vacancies in other employers' labor forces, and the latter 
employers found it necessary in turn to draw workmen away from the 
labor forces of still other employers — at higher wage rates. The 
result has been a spiraling increase in the migration of labor, not 
only to war-work industries from peace-time industries, essential as 
well as non-essential, but from peace-time industry to peace-time 
industry and from employer to employer to employer within the same 
industry — at ever increasing wage rates and accompanied by increas¬ 
ing wage costs of product not only through such increase in wage 
rates but through Increased proportion of overtime work compensated 
at time-and-one-half. Freezing employees' wage rates in the positions 
they occupy at the moment has not prevented them from obtaining higher 
wage rates by migrating, and is not preventing their former employers 
from paying higher wage rates in order to replace them with other 
migrating workers. 

The great increase in labor turnover and of the effects thereof 
was reported by baking company managers particularly in war-work com¬ 
munities from Seattle, Washington to Portland, Maine, from Boston, 
Massachusetts to Tampa and Lakeland, Florida, and from Detroit, Chicago 
and Minneapolis to New Orleans. Some of them furnished comparative 
statistics or measures of labor turnover. 

In New Orleans, one small baking company replaced 36 employees 
during the quarter ended September 30, 1942, as compared with 15 em¬ 
ployees during the quarter ended December 31, 1941, in order to main¬ 
tain a force of 60 employees. Another replaced 73 employees during 
the more recent quarter as compared with 28 employees during the 
quarter ended March 31, 1942, in order to maintain a force of 106 
employees and as compared with 18 replacements in order to maintain a 
force of 80 employees during the quarter ended March 31, 1941. A 
third company, which did not have data for an earlier period, replaced 
22 employees during 2 weeks ended early in November, 1942, or at the 
rate of 143 replacements per quarter, in order to maintain a force of 
135 employees. 

In Jacksonville, Florida, one baking company, wltn a force of 160 
employees, replaced 36 of these employees during October, 1942, as 
compared with 15 replacements during the preceding October, or at the 
rate of 108 replacements as compared with 45 replacements per quarter, 
in order to maintain this force. Another Jacksonville baker, with a 
force of 225 employees, sustained 71 separations during a 4-week 
period in October, 1942, or at the rate of nearly 103 percent per 
quarter, while a third reported a turnover of approximately 100 per¬ 
cent during the quarter ended September 30, 1942; neither company had 


46 


data available for a period in 1941. In Atlanta, Georgia, one baking 
company replaced 106 employees in a force of 132 during the quarter 
ended September 30, 1942, as compared with 39 replacements in a force 
of 130 employees during a quarter in 1941, only 5 or 6 losses in the 
later period being caused by the Draft. Another Atlanta baking company 
with a force of 258 employees, replaced 29 employees during a 4-week 
period in October, 1942, or at the rate of 36.5 percent per quarter; 
this company did not furnish data for a period in 1941. In contrast, 
another Atlanta baker had reduced his labor turnover from 69 percent 
during the third quarter of 1941 to 46 percent during the corresponding 
quarter in 1942; 65 to 75 percent of his force consisted of women. 

In Detroit, Mich., one baker reported that recently his labor 
turnover rate has been 7 percent (presumably per month) as compared 
with 2 percent a year ago. A second baker reported a turnover of 75 
percent during the last 6 months as compared with 5 percent during 
the corresponding period last year. A third reported labor turnover 
at the rate of about 250 percent per annum in 1942 as compared with 
approximately 20 percent in 1941. 

A baker in a Nebraska community reported recent labor turnover 
at the rate of approximately 8 percent per month as compared to 4 or 5 
percent prior to March, 1941. In another Nebraska community, another 
baker reported that since April, 1942, his labor turnover has been 8 
to 10 percent per month as compared to about 2 percent before that 
month. In a third Nebraska community, a baking company with a force 
of from 90 to 100 employees reported that about 50 employees left his 
service during the first three quarters of 1942 as compared with a 
turnover at the rate of 4 percent per annum 14 months ago. 

In Cincinnati, Ohio, one baker compared a turnover of 48 percent 
this year with a turnover of 25 percent last year. One baking company 
in New York City hired 136 new employees during the quarter ended 
September 30, 1942, to maintain a force of 105 as compared with 138 
hired during the corresponding quarter in 1941 in order to maintain a 
force of 125. Another New York baking company hired 370 new employees 
in order to maintain a force of 216 during the quarter ended Septem¬ 
ber 30, 1942, as compared with 280 hired to maintain a force of 202 
during the corresponding quarter in 1941. 

Many baking companies that were not accustomed to compilation of 
labor turnover statistics prior to 1942 have become labor-turnover 
conscious and have commenced compiling such data. Several of these 
have been referred to above. A baker in Lakeland, Fla., with a total 
force of 42 employees, of which about one-half are in the bake shop, 
stated that he had sustained a turnover of 100 percent in the bake 
shop in the last 60 days. A baker in Tampa, Fla., with 24 employees 
in his plant, had, also sustained a turnover of 100 percent in the last 
90 days, and had only one keyman left; out of 6 routemen, 4 had been 
replaced. Another Tampa baker had lost about 20 out of 80 employees, 
with a 50 per cent loss in his bake shop. An Atlanta baker reported 
a 30 percent turnover during a "recent" period. A baking company opera¬ 
ting in Wilmington, N. C., replaced 92 employees in a force of 124 


\ 


47 


(luring the third quarter of 1942. An Ohio baker with two plants of 
about 50 employees each reported a labor turnover of about 5 percent 
per month. Many other baking companies in Seattle, Minneapolis, 

St. Paul, New York City, Portland (Me.) and elsewhere, while not sub¬ 
mitting specific data, have cited their large losses of employees in 
the Draft and to the war-work industries as having caused them great 
difficulties in maintaining adequate forces and increased operating 
costs, not only through rising average base wage rates but also 
through increased proportion of overtime work. 

Direct Effects of High Labor Turnover . - As already intimated, 
one effect of this high labor turnover in the bread baking industry 
has been a progressive increase in wage rates, not through adjustment 
of the rates of workers already in the employ of the company (except 
as this has become necessary to put their rates into proper relation¬ 
ship to the wage rates paid new acquisitions) but through replace¬ 
ments at higher wage rates. 

A second ’direct effect has been an under-manning of the bake 
shops for the work to be done to supply the route vehicles with the 
quantities of bread necessary for supplying the consuming public and 
a consequent Increase in the amount and proportion of overtime work, 
which further increases the cost of operation because the overtime 
work must be remunerated at a rate that is one and one-half times the 
base hour-rates. 

A third direct effect has been a relative inefficiency of the new 
employees during the period necessary for them to develop dexterity 
and skill in their work, resulting in more spoilage, reduced output 
per man-hour and prolonging the period in which overtime work is 
necessitated. 

Indirect Effects of High Labor Turnover . - It is obvious that a 
large amount of industrial power, inclusive of man-power, is necessary 
to supply adequately the military, naval and air forces with equipment, 
ordnance, munitions and other material with which to carry on their 
operations effectively, adequately and successfully, but also that 
another large quantity of industrial power, inclusive of man-power, 
is necessary for the production of food and the other necessaries of 
life with which to sustain adequately not only the military, naval and 
air personnel and the personnel engaged in the war-work industries 
but also to sustain the personnel engaged in production of these 
necessaries of life, and to sustain the families of all this personnel, 
and that if the industrial power and man-power left to the production 
of these necessaries of life is inadequate to serve the purpose in 
sufficient volume, the production of war material will suffer and the 
conduct of the military, naval and air operations will suffer, and that, 
if there is not sufficient man-power with which to man these classes 
of activity adequately and in correct proportions and at the same time 
to man non-essential Industries and business at their normal peacetime 
strength, either additional man-power must be provided through the em¬ 
ployment of women who normally would not be engaged in industry or man¬ 
power must be drawn away from the non-essential industries and busi¬ 
ness or that efforts be made to increase labor efficiency. 




48 


The great Intensification of the rate of labor turnover In the 
baking Industry (and, doubtless, in other peacetime industries and 
business as well) was the natural result, not only of the Draft, but 
of building up the labor forces in the war-work Industries through 
the normal peacetime competitive process of offering in these indus¬ 
tries wage rates that, after the exhaustion of the depression-period 
unemployed, were sufficiently high to attract personnel away from 
other employment. The continuance of this intensified rate of labor 
turnover is evidence of a shortage of utilized labor force with which 
to carry on the desired volume of production in the war-work industries 
and at the same time to carry on both the volume of production that is 
needed in the other essential industries and the volume of production 
that is desired by those conducting non-essential Industries and busi¬ 
ness. 


Certain non-essential production has been suspended by Government 
order, but not all. And the non-essential industries and business 
that have not been suspended are competing for personnel with the war- 
work and the other essential Industries. This competition helps to 
Intensify the rate of labor turnover, to the detriment both of the 
war-work industries and of the other essential industries. 

According to the testimony of baking company managers, the 
situation created by this competition for an inadequate supply of 
labor has had important effects other than the forcing up of wage 
rates and the other direct effects noted under the preceding topic. 

One important effect has been a growing spirit of independence 
in a considerable portion of the workers, an indifference to their 
responsibility for performance of the work assigned to them, disregard 
of regulations pertaining to shop conduct — all seemingly based on 
the idea that the worker can easily find employment elsewhere at higher 
wages. 

The manageress of a New Orleans baking company, the chief product 
of which was French bread, stated that many of her employees had ob¬ 
tained employment in other bakeries and were holding two jobs, working 
five to seven hours in her bakery followed, or preceded, by working a 
shift in the other bakery — thereby earning two weeks wages in one 
week. However, after working for another baker for a couple of weeks, 
they became Indifferent to the matter of whether the work assigned 
them was taken care of properly, and if a workman (presumably fatigued 
from carrying on two jobs) did not feel like working when time came to 
report, he simply claimed to be "sick" and did not come to work, there¬ 
by leaving the shift short-handed. 

Another baker stated that, in the interests of sanitation and of 
preservation of equipment, he had certain rules of conduct and pro¬ 
cedure in his bakery. Formerly, if, when making an inspection trip 
through his bakery, he observed any infraction of a rule, he spoke to 
the workman about it and, if the workman persisted in the infraction, 
he was discharged. More recently, if he spoke to a workman about any 
undesirable practice, the employee would walk out and obtain employ¬ 
ment elsewhere. 


49 


A baking company in Minneapolis stated that it had a large loss 
of experienced operatives to the war-work industries and to the armed 
forces; that in replacing such losses with any help that applies, this 
help is usually inexperienced and not really anxious to work; and that 
many of these new employees work a few days, then absent themselves 
for one day, then return to work. 

A baking company in another city complained about a large amount 
of absenteeism on Sundays. 

A New Orleans baking company, which bakes both French bread and 
pan bread and which has been suffering from short-handed forces dur¬ 
ing the recent period of intensified labor turnover, stated that the 
labor contracts require a complete separation of the jobs in French 
bread making from the jobs in pan bread making. In consequence, when 
lacking an operative for the pan bread ovens, for example, the manager 
could not transfer a French bread oven operative to the job at the 
pan bread oven even though the French bread oven operative was fully 
qualified for the job but would have to let a pan bread oven go under¬ 
manned, or shut it down until the pan bread oven operative could be 
employed. 

A complaint made frequently by baking company managers in New York 
City and in New England communities during the inquiry that was car¬ 
ried on during the Autumn of 1941 was to the effect that the route- 
men prevented them from rearranging and consolidating routes so as to 
eliminate routes with thin and unprofitable volume by absorbing the 
territory in other routes, because to permit such consolidation was to 
eliminate a job. There was less complaint on this score during the 
more recent inquiry, even though the mileage-reduction order by the 
Office of Defense Transportation necessitated such consolidations: 
the Draft and migration of routemen to other Industries had created 
vacancies in jobs that offered opportunity to effect such rearrange¬ 
ments and consolidations of routes. However, resistance to such con¬ 
solidation had persisted to some extent, according to some reports, 
this resistance taking the form either of objection to the elimination 
or of demand that the displaced routemen be retained on the company's 
payroll either temporarily or permanently. 

This resistance to the elimination of unprofitable routes through 
consolidation is one expression of the desire of work people in ordinary 
times to preserve their jobs. This same desire, coupled with a widely 
held theory to the effect that there is only so much work to be done 
and that the course of action to take is to make the available work go 
around, is claimed to lead, in some Instances, to resistance to the 
introduction of improved machinery and methods, and to the "slowdown.” 

One baking company stated that resistance prevented it from making 
such improvements, thus compelling it to continue use of the old and 
relatively inefficient process. 

Complaints alleging application of the "slowdown" by bakery forces 
have been made by bakers in several communities. The "slowdown," it 
is alleged, is applied for three purposes; viz: (1) as a means of putting 


50 


pressure upon the baking company to accede to a demand; (2) as a means 
of maintaining the maximum number of jobs; (3) as a means of creating 
the necessity for overtime work. As illustrations of the second and 
third purposes, a New England baker stated that there had been a 
chronic slowdown in his plant for more than a year, a slowdown of such 
degree as to add as much as 4 hours per day to the regular schedule. 
Another New England baker stated that operations in his plant had suf¬ 
fered from slowdown almost continuously since their labor contract was 
signed. The manager of a bakery in a Southern community stated that 
the operative who tends the divider, which does not require continuous 
concentrated attention, habitually spent much time in exhorting near¬ 
by operatives not to work too hard — that there was no sense in work¬ 
ing themselves out of a job. Some other bakers expressed suspicion of 
slowdown although they had no concrete evidence of it. However, the 
allegations as to the practice of the slowdown were isolated rather 
than general. 

Another difficulty experienced by some baking companies in com¬ 
munities adjacent to military cantonments has related to the inter¬ 
pretation of the territorial rights of the routemen. The contract with 
a routeman may assign him certain territory and provide that he shall 
receive the stipulated rate of commission not only on sales and de¬ 
liveries in his territory made by him directly but also on any other 
sales and deliveries made in his territory. The purpose of this pro¬ 
vision is to cover emergency deliveries to customers in the route- 
man's territory. With the establishment of a military cantonment or 
of some other Governmental unit in such territory, a contract for a 
regular supply of bread would be made directly between the baking com¬ 
pany and the Governmental agency. The routeman in whose previously 
assigned territory such Governmental unit was established would claim 
the regular commissions on these sales, notwithstanding the facts that 
he had had no part in the negotiation of the contract and that these 
deliveries were not sporadic emergency deliveries to any of the route- 
man's regular customers. Many of these contracts were of such volume 
as to require delivery of the bread by special truck; yet the routeman 
would contend that he was entitled to his regular commission on such 
sales. Where the amount of commission involved was small, say $10 per 
week, the company would allow the commission rather than have a contro¬ 
versy and, perhaps, lose a dissatisfied salesman; and if the volume 
involved was not so large as to make it impractical for the route 
vehicle to carry this bread in addition to the regular load, the route- 
man would be permitted to make these deliveries in order to render some 
service in return for this additional commission. In one case, in 
which the deliveries were made in a large special truck, the amount of 
such commission in controversy was approximately $10,000 a year as com¬ 
pared with about $4,300 a year of commissions on the deliveries by the 
routeman to his own regular customers. These commissions, where con¬ 
ceded, naturally made delivery cost unnecessarily high. Of course the 
remedy whereby to avoid such situations in the future is amendment of 
the contract form so as clearly to limit such extra commissions to 
sporadic emergency deliveries to the routeman's regular customers and 
as to exempt large contracts for continuing service that require de¬ 
livery in special trucks. 


51 


Another taker claimed that a few of his employees of long service 
were taking advantage of the labor shortage to demand special privileges 
for themselves at the company’s expense. 

Increase of Productive Labor Costs per 100 Pounds of Bread and 

Importance Thereof . - How much has the increase in wage rates through 
migration and otherwise increased the cost per unit of bread and rolls? 
How Important is labor cost in the production of bread and rolls? 

Table 2, which follows presents a summary of the results of 
comparative data obtained in this Inquiry from wholesale bakers in six 
areas in the United States. These statistics compare results in an 
accounting period that included March 31, 1942, with results in an 
accounting period that included September 30, 1942. 


Table 2. Comparison of Total Quantities of Bread and Rolls Produced, of 
Average Costs per 100 pounds for Total Cost Produced and Wrapped and 
for Productive Labor, for Wholesale Bakers In 6 areas, for Accounting 
Periods including March 31, 1942, and September 30, 1942 



Total Pounds Produced 

Average Cost 

Per 100 Lbs 

• 

To Produce 
and Wrap 

For Productive 
Labor 

Mar. 31, 
1942 

Sept. 30, 
1942 

Mar. 31, 
1942 

Sept. 30, 
1942 

Mar. 31, 
1942 

Sept. 30, 
1942 

Wholesale Area No. 1 

137,572,043 

155,339,429 

$4.79 

$4.86 

$0.77 

$0.83 

Wholesale Area No. 2 

20,150,778 

23,569,092 

4.68 

4.77 

0.67 

0.72 

Wholesale Area No. 3 

62,462,914 

69,535,762 

4.77 

4.83 

0.73 

0.80 

Wholesale Area No. 4 

78,442,321 

79,867,901 

3.82 

4.49 

0.60 

0.75 

Wholesale Area No. 5 

9,900,314 

12,867,901 

4.48 

4.71 

0.82 

0.97 

Wholesale Area No. 6 

31,335,869 

35,176,931 

4.38 

4.58 

0.69 

0.78 

Total or Average 

339,864,239 

376,357,154 

4.51 

4.74 

0.71 

0.80 


Wholesale Area No. 1 includes Maine, New Hampshire, Vermont, Connecticut, Massachusetts, 

Rhode Island, New York, New Jersey, Pennsylvania, Maryland, District of 
Columbia, Delaware, Virginia and West Virginia. 


Wholesale Area No. 2 Includes North Carolina, South Carolina, Georgia, Florida, Tennessee, 
Mississippi and Alabama. 

Wholesale Area No. 3 includes Ohio, Indiana, Illinois, Wisconsin, Michigan and Kentucky. 

Wholesale Area No. 4 includes Louisiana, Texas, Arkansas, Kansas, Missouri, Iowa, Nebraska, 
South Dakota, North Dakota, Montana, Minnesota, Colorado and Oklahoma. 


Wholesale Area No. 


5 Includes Washington, Oregon, Utah, Wyoming and Idaho. 


Wholesale Area No. 


6 includes California, Arizona, New Mexico and Nevada. 
















52 


The foregoing table compares productive labor costs and total 
production and wrapping cost per 100 pounds of bread and rolls for 
339,864,239 pounds produced by wholesale bakers in 6 areas during an 
accounting period that included March 31, 1942 with the like costs for 
376, 357,154 pounds produced by the same bakers during a corresponding 
period that included September 30, 1942. 

It will be seen that from the earlier to the later accounting pe¬ 
riod the average productive labor cost increased from 71 cents to 80 
cents per 100 pounds — an increase of 9 cents per 100 pounds or 9/10 
of a mill per pound. The increase ranged, in different areas, from 
5 to 15 cents per 100 pounds. The average increase was 12-2/3 percent. 

It is noteworthy that so large a percentage of increase should 
result in so small an increase in the productive labor cost per pound. 
The reason is that, in pan-bread baking, which is highly mechanized in 
most large bakeries, labor cost is a small part of the total cost of 
the bread produced and wrapped. This is evidenced by the fact that the 
average productive labor cost per 100 pounds of bread and rolls was 
only 71 cents in a total of $4.51, or 15.74 percent of the total, during 
the earlier period, and only 80 cents in a total of $4.74, or 16.88 
percent of the total, during the later period. 

The table shows that the average total cost to produce and wrap 
the bread and rolls increase from $4.51 cents per 100 pounds during 
the earlier period to $4.74 per 100 pounds during the later period. 

The average increase was 23 cents per 100 pounds, and ranged, in dif¬ 
ferent areas, from 6 cents to 67 cents. The increase in the total 
cost, although only 5.1 percent as compared with the average increase 
of 12-2/3 percent in productive labor cost, was much greater than the 
labor cost increase in cents per hundred pounds. This again is due to 
the fact that labor costs are relatively unimportant in comparison with 
materials costs. 

Section 11 . Premiums 

The practice of giving premiums or coupons redeemable in bakery 
goods or other commodities is not extensively used in the baking in¬ 
dustry at present. Of 124 bakers interviewed who definitely stated 
their practice, only five stated that they were giving premiums or 
coupons of any kind. Of 438 wholesale bakeries from which report forms 
were obtained and tabulated up to November 29, only 37, about 8.5 per¬ 
cent, were giving premiums and 19 of these bakeries were units of one 

of the four largest wholesale baking companies. 

The total cost of premiums given, the gross sales, total poundage 

of bread produced and cost of premiums per $1.00 of sales and per 100 

pounds of bread sold for the 37 bakeries were divided as between the 
19 units of one national baking company and all other bakeries report¬ 
ing as follows: 




53 


Group 

Premiums 

Given 

Total 

Sales 

Bread 

and 

Rolls 

Total 
Pounds 
Bread and 
Rolls 
Produced 

Per 

$1.00 

of 

Sale's 

(Cents) 

Per 

100# 

Bread 

(Cents) 

19 bakeries of 

1 company 

$ 3,901 

$2,716,997 

$34,273,266 

.1436 

1.14 

18 other bakeries 

8,483 

1,020,365 

12,834,562 

.8313 

6.61 

Total 37 bakeries 

12,384 

3,737,362 

47,107,828 

.3314 

2.63 


For these companies, the cost of premiums and coupons averaged 
about 3 mills per dollar of sales or about 2.6 cents per hundred loaves 
of bread. Incidentally, however, it will be noted that the average 
unit cost to the 19 bakeries owned by one big company was only about 
1/6 that of the average unit cost to the other 18 bakeries. 

Savings that might be accomplished by the elimination of premiums 
are small and confined entirely to relatively few companies that give 
premiums. The sporadic practice, how'ever, is generally condemned as 
an evil by the baking industry, and should be discontinued throughout 
the industry. 

Section 12 . Returns on Investment and Profits on Sales - Bread 
Baking Industry 

Introduction . - Information concerning the profitableness of the 
operations of the bread baking companies from which financial data were 
obtained is presented in this section of the report in terms of return 
on capital investment and profit or loss on sales. 

Usable financial data were obtained in this inquiry from a maxi¬ 
mum of 309 companies with plants located in all parts of the United 
States. Such information was received from the four largest compa¬ 
nies in the industry, as well as from a representative number of other 
large, small, and medium sized companies. 

Returns on investment and profits on sales are presented for the 
year 1941 and for the period in 1942 to the latest available date for 
the companies from which financial data were obtained in this inquiry, 
and for the years 1936 to 1940, inclusive, for a smaller number of com¬ 
panies from which such information was obtained in the Commission's 
1941 inquiry into the bread baking industry. 

Returns on Investment . - Rates of profit or loss in relation to 
total investment are presented herein for all companies combined and 
for groups of companies according to size, based upon their sales in 
1941. 


The total investment represents the par or stated value of the 
companies' capital stocks outstanding, surplus, and long-term debt. 
















54 


Returns on the total Investment were computed by relating to the 
average of the investment at the beginning and end of each year, the 
net income before deduction of interest on long-term debt and provi¬ 
sions for income and excess profits taxes. 

That the bread baking industry in general has been profitable, 
and particularly so during 1942, is indicated in the following table. 
This table shows for each of the years 1936-1942, the average rate of 
return earned on the total investment, classified according to the 
number of companies doing a wholesale business and the number doing a 
house-to-house business: 


Number of Companies 

Rates of Return * 



House 



House 




to 



to 



Wholesale 

House 

Total 

Wholesale 

House 

Average 





(percent) 

(percent) 

(percent) 

1936 

37 

8 

45 

11.04 

11.20 

11.05 

1937 

42 

10 

52 

10.32 

10.98 

10.37 

1938 

46 

10 

56 

12.41 

18.74 

12.92 

1939 

46 

12 

58 

11.21 

16.36 

11.62 

1940 

46 

12 

58 

10.58 

13.16 

10.79 

1941 

271 

30 

301 

10.91 

10.54 

10.91 

1942 

235 

28 

263 

15.85 

10.99 

15.59 


* Before provision for Income and excess profits taxes. 


The following tabulation summarizes for all companies the returns 
on total investment for 1941 and 1942 by size groups, based upon the 
sales of the companies in 1941: 



Number of 

Number of 

Average 


Companies 

Companies 

Rate 


Reporting 

Reporting 

of Profit 


Profits 

Losses 

(percent) 

Sales Group 

1941 

1942 

1941 

1942 

1941 

1942 

Under $500,000. 

132 

126 

35 

15 

10.03 

18.37 

$500,000 to $1,000,000. 

60 

62 

12 

2 

13.39 

21.77 

$1,000,000 to $20,000,000. 

50 

51 

8 

3 

12.78 

17.46 

Over $20,000,000. 

4 

4 

0 

0 

9.19 

12.81 

Total. 

246 

243 

55 

20 

10.91 

15.59 




























55 


The rates of return for identical companies from which financial 
data were obtained in 1941 and 1942, were substantially the same, as 
shown above for all reporting companies. In 1941 reports were re¬ 
ceived from 46 companies which did not report financial Information 
for 1942, and in 1942 reports were received from 8 companies which did 
not report such Information for 1941. The following tabulation com¬ 
pares the results on the basis of total investment. 


Returns for Identical Companies Only 



Number of 

Number of 

Average 


Companies 

Companies 

Rate 


Reporting 

.Reporting 

of Profit 


Pro: 

fits 

Losses 

(percent) 

Sales Group 

1941 

1942 

1941 

1942 

1941 

1942 

Under $500,000. 

108 

120 

26 

-14 

10.37 

18.81 

$500,000 to $1,000,000. 

53 

62 

11 

2 

13.73 

21.77 

$1,000,000 to $20,000,000. 

46 

50 

7 

3 

12.98 

17.44 

Over $20,000,000. 

4 

4 

0 

0 

9.19 

12.81 

Total. 

211 

236 

44 

19 

10.98 

15.60 


Profits for the 211 companies ranged from 0.04 percent to 97.18 
percent of investment in 1941; and for the 236 companies the range was 
from 0.60 percent to 114.62 percent in 1942. The losses reported by 
44 companies in 1941 ranged from 0.52 to 102.92 percent, while the 
losses reported by 19 companies in 1942 ranged from 0.42 to 114.24 
percent. The low and high rates of profit and loss on total invest¬ 
ment for other companies is shown for 1941 and 1942 by size groups, 
based upon the 1941 sales of the companies, in the following 
tabulation: 



Rates of Profit 


1941 

1942 


Low 

High 

Low 

High 

Under $500,000. 

0.04 

97.18 

0.93 

114.62 

$500,000 to $1,000,000. 

2.46 

61.77 

1.16 

120.23 

$1,000,000 to $20,000,000. 

0.32 

77.2? 

- 0.00 

81.22 

Over $20,000,000. 

1.81 

13.38 

5.98 

19.22 



Rates 

of Loss 



1941 

1942 

• 

Low 

High 

Low 

High 

Under $500,000. 

0.52 

102.92 

0.42 

114.24 

$500,000 to $1,000,000. 

1.16 

70.44 

■ 2.46 

5.94 

$1,000,000 to $20,000,000. 

0.94 

18.00 

1.77 

14.41 

Over $20,000,000. 

0.00 

0.00 

0.00 

0.00. 

















































56 


The following table shows the number of companies falling in each 
5 percent profit or loss group in 1941 and 1942. 


Profit or Loss 

Groups 

Number of Companies 
Reporting 

Profit 

Number of Companies 
Reporting 

Loss 

Percent 

1941 

1942 

1941 

1942 

Under 5. 

38 

21 

19 

4 

5 

to 

10. 

42 

33 

8 

6 

10 

to 

15. 

31 

37 

8 

2 

15 

to 

20. 

27 

35 

2 

1 

20 

to 

25. 

22 

25 

1 

0 

25 

to 

30. 

16 

32 

0 

1 

30 

to 

35. 

11 

12 

1 

1 

35 

to 

40. 

7 

11 

0 

0 

40 

to 

45. 

4 

5 

0 

0 

45 

to 

50. 

4 

4 

0 

0 

50 

to 

55. 

5 

7 

0 

0 

55 

to 

60. 

1 

3 

0 

0 

60 

to 

65. 

1 

1 

0 

0 

65 

to 

70. 

0 

4 

1 

0 

70 

to 

75. 

0 

0 

1 

1 

75 

to 

80. 

1 

0 

0 

0 

8 ON 

to 

85. 

0 

1 

0 

0 

85 

to 

90. 

0 

0 

0 

0 

90 

to 

95. 

0 

1 

0 

0 

95 

to 

100. 

1 

1 

1 

0 

Over 

100. 

0 

3 

2 

3 

Total identical 

companies. 

211 

236 

44 

19 


Profits on Sales . - In this inquiry, Information concerning sales 
and profits on sales was tabulated for 300 companies for the year 1941 
and for 261 companies for the year 1942. Such Information for the 
years 1936-1940 was obtained in the Commission's 1941 Inquiry into the 
bread baking industry and is available for a smaller number of com¬ 
panies for those years. 

The following tabulation shows the ratios of profits earned on 
net sales, expressed in cents per dollar of sales, of the reporting 
companies for the years 1936 to 1942, inclusive, classified according 
to the number of companies that do a wholesale business and those 
doing a house-to-house business. 

FTC LL1909 



































57 


Number of Companies 

Average 

Profit on Net Sales 


Whole- 

House-to- 


Whole- 

House-to- 


Year 

sale 

House 

Total 

sale 

House 

Average 





(Cents) 

(Cents) 

(Cents) 

1936. 

37 

9 

46 

5.62 

4.65 

5.54 

1937. 

41 

10 

51 

4.67 

4.41 

4.65 

1938. 

46 

10 

56 

6.10 

7.83 

6.26 

1939. 

46 

12 

58 

5.58 

6.67 

5.69 

1940. 

46 

12 

58 

5.09 

5.02 

5.08 

1941. 

269 

31 

300 

4.38 

2.78 

4.25 

1942. 

232 

29 

261 

6.18 

3.07 

5.95 


The profits in relation to net sales for the years 1941 and 1948 
are further summarized in the following table. This table shows the 
profits for the wholesale and house-to-house companies grouped 
according to size based on their sales in 1941. 



Number 

Average 

Profit on 


of Com 

panies 

Net 

Sales 




(Cents) 


1941 

1942 

1941 

1942 

Wholesale Companies 





Under $500,000. 

151 

124 

2.84 

4.68 

$500,000 to $1,000,000. 

66 

60 

4.29 

6.23 

$1,000,000 to $20,000,000. 

48 

44 

4.63 

6.65 

Over $20,000,000. 

4 

4 

4.52 

6.03 

Total. 

269 

232 

4.38 

6.18 

House-to-House Companies 





Under $500,000. 

15 

15 

2.02 

3.14 

$500,000 to $1,000,000. 

6 

4 

0.70* 

1.52 

$1,000,000 to $20,000,000. 

10 

10 

3.57 

3.24 

Total. 

31 

29 

2.78 

3.07 

Wholesale and House-to-House. 

300 

261 

4.25 

5.95 


* Denotes loss. 


In 1941, 234 of the 300 companies earned profits and 66 sustained 
losses. Of the 234 that earned profits, 212 were wholesale companies 
and 22 were house-to-house companies. The range in profits for the 
wholesale companies was from 0.190 to 20.890 per dollar of net sales, 
while the profits earned by the house-to-house companies range from 
0.320 to 10.340 per dollar of net sales. The net losses sustained 
by 57 wholesale companies ranged from 0.030 to 16.930 per dollar of 
net sales, while the losses sustained by 9 house-to-house companies 
ranged from 0.860 to 3.190 per dollar of net sales. 

In 1942, 235 of the 261 companies reported profits and 26 re¬ 
ported losses. Of the 235 that reported profits, 210 were wholesale 
companies and 25 were house-to-house companies. The profit range 













































58 


for the wholesale companies was from 0.42(£ to 22.75^ per dollar of net 
sales, while the profit range for the 25 house-to-house companies was 
from 0.34tf to 13.280 per dollar of net sales. Of the 26 companies that 
reported losses in 1942, 22 were wholesale companies and 4 were 
house-to-house companies. The ratio of loss for the wholesale com¬ 
panies ranged from 0.010 to 9.630 per dollar of net sales, while the 
losses for the house-to-house companies ranged from 0.990 to 4.700 
per dollar of net sales. 

The following tabulation shows for the years 1941 and 1942 the 
low and high rates of profit and loss on net sales, expressed in cents 
per dollar of net sales for the companies that do a wholesale business 
and for those that do a house-to-house business, by size groups based 
upon the sales of the companies in 1941. 



1941 

Net Profit 
on Sales 

Net 

on 

Loss 

Sales 

Low 

High 

Low 

High 

Wholesale 





Under $500,000. 

0.19 

20.89 

0.11 

16.93 

$500,000 to $1,000,000. 

0.37 

18.58 

0.03 

4.39 

$1,000,000 to $20,000,000. 

0.69 

15.24 

0.07 

5.51 

Over $20,000,000. 

0.37 

6.07 

0.00 

0.00 

House-to-House 





Under $500,000. 

0.32 

10.34 

0.86 

2.03 

$500,000 to $1,000,000. 

0.55 

1.03 

0.93 

3.09 

$1,000,000 to $20,000,000. 

0.39 

7.83 

1.56 

3.19 


1942 


Net Profit 

Net 

Loss 


on Sales 

on 

Sales 


Low 

High 

Low 

High 

Wholesale 





Under $500,000. 

0.42 

22.75 

0.01 

9.63 

$500,000 to $1,000,000. 

0.73 

19.87 

0.25 

1.63 

$1,000,000 to $20,000,000. 

0.88 

19.03 

0.10 

4.74 

Over $20,000,000. 

2.43 

7.57 

0.00 

0.00 

House-to-House 





Under $500,000. 

0.34 

13.28 

0.99 

4.70 

$500,000 to $1,000,000. 

0.49 

3.07 

0.00 

0.00 

$1,000,000 to $20,000,000. 

0.35 

8.23 

2.08 

2.08 


Section 13 . Officers' Salaries 

In this inquiry, the Commission requested each bread baking 
company to list the total salary and other remuneration paid to each 
principal executive officer and to each employee and each officer, 
other than a principal executive officer, who received remuneration in 
excess of $25,000 during the last complete fiscal year. 

FTC LL1909 







































59 


Reports listing officers' salaries and other remuneration were 
received from 243 bread companies, and, in addition, 155 companies re¬ 
ported no officer or employee received total remuneration in excess of 
$25,000 during the year 1941. The following tabulation shows the 
range of the total remuneration paid to the officers of the 243 com¬ 
panies reporting such information: 


Total Remuneration 

Year 1941 

No. of 
Officers 

Percent of total 
number of officers 

Under $5,000. 

248 

39.12 

$5,000 to $10,000. 

226 

35.65 

$10,001 to $15,000. 

78 

12.30 

$15,001 to $20,000. 

38 

5.99 

$20,001 to $25,000. 

25 

3.94 

Over $25,000. 

19 

3.00 

Total number of officers. 

634 

100.00 


As reported by the companies, only 19 officers, or three percent 
of the total number of officers listed, received total remuneration in 
excess of $25,000 during the fiscal year 1941. The highest remunera¬ 
tion reported was $52,000, which was received by the president of one 
of the largest baking companies. Only one company paid as many as 
three officers in excess of $25,000 during 1941, three paid two 
officers in excess of $25,000 each, and the remaining 10 officers re¬ 
ceiving total remuneration in excess of $25,000 were divided among 
that number of companies. 

The table further indicates that over 39 percent, or nearly two- 
fifths, of all officers' salaries reported were less than $5,000 
during the year 1941; over one-third were from $5,000 to $10,000; 
approximately one-eighth were from $10,001 to $15,000: about six per¬ 
cent were from $15,001 to $20,000, and slightly less than four per¬ 
cent were from $20,001 to $25,000. 

Many of the smaller bread baking concerns are not incorporated 
and the proprietors or partners do not receive salaries, but obtain 
their compensation from the division of profits. Consequently, the 
remuneration of such proprietors or partners was not included in the 
foregoing tabulation. 

























































































































\ 


